By Jason Douglas and Wiktor Szary

LONDON--Consumer prices in the U.K. rose in September at the fastest annual rate for more than five years, a pickup that will reinforce expectations that the Bank of England could nudge up interest rates as soon as next month.

Annual inflation in the U.K. accelerated to 3% in September, the Office for National Statistics said Tuesday, the fastest pace of growth in prices for goods and services since early 2012.

Consumer prices have now been rising in excess of the Bank of England's 2% target for eight straight months. BOE officials have repeatedly signaled they expect to raise borrowing costs soon to rein in inflation, despite signs the economy is slowing as consumers pare back spending and Britain's decision to exit the European Union weighs on investment.

Most economists expect the BOE to raise its benchmark interest rate to 0.5% in November, from 0.25% currently. A quarter-point rise would mark the first time the U.K. central bank has increased interest rates in a decade. Officials led by Governor Mark Carney say they expect future increases in borrowing costs to be limited and gradual.

The BOE's shift in stance comes as major central banks step back from the easy-money policies they have pursued for years in an effort to revive economies scarred by the financial crisis that tipped the world into recession in 2009.

In the U.S., the Federal Reserve has begun shrinking its huge portfolio of assets and officials are expected to raise short-term rates again in December. The European Central Bank is expected to say later this month that it will begin dialing back the pace of its own asset-buying program.

Inflation in Britain has accelerated following a fall in the pound after last year's Brexit vote. At the same time, unemployment has declined to a 40-year low, eating up the labor-market slack that would normally restrain domestic cost pressures.

In response, the BOE said in September that a majority of officials expect to raise their benchmark interest rate "within months." Policy makers also fret the economy will struggle to expand without stoking inflation as long as uncertainty surrounding the U.K.'s future ties to the European Union persists. Prime Minister Theresa May dined Monday with European Commission President Jean-Claude Juncker in an effort to spur faster progress in divorce talks between London and Brussels.

The ONS said Tuesday that September's acceleration in inflation was driven largely by higher food prices than a year earlier. Transport costs, especially airfares, also pushed up the annual rate, the agency said.

Write to Jason Douglas at jason.douglas@wsj.com and Wiktor Szary at wiktor.szary.com

(END) Dow Jones Newswires

October 17, 2017 05:08 ET (09:08 GMT)