By Marcus Leach

The UK's inflation rate jumped by 0.5% in October, according to the Consumer Prices Index (CPI).

The official rate now stands at 2.7%, having been at 2.2% in September, driven up by education costs, largely because of a sharp rise in university tuition fees.

The Office for National Statistics (ONS) also said that the Retail Prices Index (RPI) measure of inflation rose to 3.2% from 2.6%.

"A jump in inflation had been expected, not a leap. But the correct response is a sharp intake of breath, not a panic," Glenn Uniacke, senior dealer at the foreign exchange specialists Moneycorp, said.

"Surging inflation will hurt savers and pensioners, but should not derail the recovery.

"Much of the increase in prices was down to one-off factors like tuition fees, or external ones like energy prices.

"The Pound is likely to strengthen in the short term as the odds of imminent QE lengthen. But while the Bank of England is obliged to keep inflation in check, the economy's fragile return to growth is clearly a far bigger concern.

"Noone should doubt that if the Bank thinks it needs to print more money to stimulate growth, it will not hesitate do so.

"The prospect of further QE has receded only temporarily, and any boost in Sterling will likely be equally brief."

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