Bank of England boss warns of rising inflation on Brexit-hit pound

Bank of England chief Mark Carney warned Tuesday that UK inflation would rebound in the coming months as the Brexit-fuelled slump in the pound sparks price hikes.

Carney, addressing lawmakers on the influential Treasury Select Committee, cautioned that "inflation is going up (and) that's a consequence of a very large move" in the exchange rate.

His comments came however as official data showed that British annual inflation had experienced an unexpected slowdown in October from a two-year high.

The 12-month inflation rate declined to 0.9 percent compared with 1.0 percent in September, the Office for National Statistics (ONS) said in a statement.

That undershot market expectations for a slight increase to 1.1 percent, as inflationary pressures subsided on smaller-than-anticipated hikes in the cost of clothing and university tuition fees.

"Inflation was lower than we expected for the month of October," Carney admitted in his grilling before MPs.

For its part, the ONS maintained that there was "no clear evidence" that the plunge in the value of the pound since the shock EU exit referendum was currently bumping up shop prices.

However, the BoE chief stressed this did not change the overall outlook for rising inflation on the recent slump in the pound against the euro and dollar.

Carney had decided earlier this month that he would remain governor until June 2019, one year longer than initially planned, to aid an "orderly transition" to Brexit.

The ONS also revealed that the price of goods leaving factories in Britain jumped further last month -- and partly blamed the sliding pound which has lifted imported raw material costs for UK firms.

Producers' output prices advanced 2.1 percent in October from the same month a year earlier, accelerating from 1.3 percent in September.

That was the fourth consecutive monthly gain, after two years of falling prices, and represented the largest increase since April 2012.

"The increase in producer price inflation over the past several months can be partly attributed to the changes in the sterling exchange rate," the ONS noted.

"Today's surprise fall looks like a blip, as sterling weakness continues to raise the cost of inputs for UK businesses," noted Ben Brettell, senior economist at stockbroker Hargreaves Lansdown.

"It should be only a matter of time before this feeds into higher consumer prices.

"The Bank of England now expects inflation to hit 2.7 percent next year, but some analysts are predicting it will reach 4.0 percent as sterling weakness pushes up import costs," he added.

The pound tumbled following Britain's shock June 23 vote in favour of leaving the European Union, striking 31-year dollar lows and 7.5-year troughs against the euro.

It has since clawed back some ground after London's High Court recently ruled that the government must seek parliamentary approval before triggering Brexit.