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Latest acceleration in the U.K. inflation is only the tip of the inflationary iceberg and the figure is set to rise above the central bank's 2 percent target over the course of the next year, former Bank of England Monetary Policy Committee member Andrew Sentance said Tuesday.
The Office for National Statistics reported that the consumer price inflation rose more-than-expected to 1 percent in September from 0.6 percent, marking the highest level since November 2014.
Core inflation that excludes food, energy and alcohol and tobacco prices increased 1.5 percent from 1.3 percent.
"Higher import prices are feeding through to consumers because of the fall in sterling since the EU referendum vote," Sentance, who is now the senior economic adviser at PwC said.
"This latest rise, however, is just the tip of the inflationary iceberg which is coming our way."
A weaker sterling will continue to push up inflation in the months ahead and a stronger oil price will add further to price rises for energy and transport, he said.
"Over the course of next year, we should expect inflation to rise above the Bank of England's 2 percent target," Sentance said. "This will squeeze household spending power and add to the slowdown in the economy in 2017."
The PwC forecast a slowdown in U.K. growth to around 1 percent next year, with investment cutbacks reinforcing the slowdown in consumer spending.
