LONDON — U.K. inflation picked up sharply to a higher-than-expected 2.3% in October, data from the British Office for National Statistics showed Wednesday.

The hike marks a sharp increase from the 1.7% rise recorded in September and exceeds the 2.2% forecast of economists polled by Reuters.

Core inflation, which excludes energy, food, alcohol and tobacco, came in at 3.3% for the month, up slightly from 3.2% in September.

Price rises in the U.K.’s dominant services sector ticked up moderately to 5.0% last month from 4.9% in September, hitting its lowest rate in more than two years.

The latest data will feed into the Bank of England’s upcoming interest rate decision on Dec. 19, though one further inflation print is due before the meeting.

The central bank cut rates by 25 basis points earlier this month, but signaled that future rate cuts would be “gradual” amid renewed challenges to the economic outlook.

Lindsay James, investment strategist at Quilter Investors, said the Wednesday inflation print had made it “increasingly likely” that the British central bank will close out the year with a hold on rates.

“This is a clear reminder that short term inflationary pulses may return, potentially caused by factors such as obstacles to trade, labour market tightness, taxation and volatility in food and energy prices,” James said.

A line of trucks parked outside a shipping terminal in Yokohama, Japan, on Monday, Dec. 4, 2023. Japan's trucking industry is facing stricter rules from next spring that risk triggering a nationwide wave of delivery delays affecting everything from factory component supplies to fresh food on supermarket shelves. Photographer: Akio Kon/Bloomberg via Getty Images

“Whether October’s uptick in inflation proves to be just a blip remains to be seen, however it seems more likely that the Bank may err on the side of caution in coming months as a growing list of inflationary risks emerge on the horizon,” she added.

A cloud of uncertainty has been hanging over the U.K. over recent months, with the Labour government accused of talking down the economy following its July 4 election and of delaying to present its fiscal agenda.

U.K. Finance Minister Rachel Reeves delivered her Autumn budget on Oct. 30, announcing £40 billion ($51.8 billion) worth of tax rises to plug what she dubbed a “black hole” in the public finances, as well as changes to the U.K.’s debt rules to facilitate further public spending.

Commentators, including government-funded but politically neutral Office for Budget Responsibility, have warned that the measures were likely to push up inflation while raising the U.K.’s near-term growth outlook.

Globally, the prospect of trade tariffs under incoming U.S. President Donald Trump has raised the specter of further inflationary pressures in 2025.