UK inflation rises to 3.5 percent alongside expanding budget deficit

annual inflation in the United Kingdom increased to 3.5 percent last month while the monthly government deficit reached 24.5 billion pounds, according to Guardian Business and AOL.co.uk. The rise in consumer prices was higher than expected by financial markets ahead of the upcoming government budget statement. [1][3]

Data from the Office for National Statistics showed that the consumer prices index rose from 3.1 percent in August, Guardian Business reported. The publication noted that analysts in the City of London had forecast inflation to reach 3.4 percent. Surging fuel costs contributed to the increase following higher oil and gas prices since late February. [1]

Inflation measures the annualized percentage change in a general price index such as the consumer prices index. When price levels rise, each unit of currency buys fewer goods and services, which reduces the purchasing power of money. [4]

Guardian Business reported that debt interest payments for the government rose to a record high for the month of September. Chancellor John Healey faces these financial figures ahead of the official budget announcement scheduled for next week. [1][3]