Inflation is in the difficult “last mile” period before it is wrung out of the economy, says Bank of England deputy governor Clare Lombardelli, which is why she supports “gradual” rate cuts.

Lombardelli, who is also a Monetary Policy Committee member, said that although inflation has fallen from a peak of 11.1% in October 2022 to its current 2.3%, general prices have begun to edge higher.

Prices lifted to 2.3% in October from 1.7% in September driven by rising household energy bills, Lombardelli told a Bank of England Watchers Conference in London this morning.

But she also warned the services inflation and wage growth hover at around 5%, and the rate-setting committee has repeatedly said it wants to see these measures fall comfortably below this figure, to pre-pandemic levels.

Services annual inflation rose from 4.9% to 5% in October, while regular earnings lifted by 4.8% from July to September from a year ago.

Lombardelli said: “The outlook for wages and services prices is unclear from here. We need to see more evidence that wage growth and services inflation will continue their journey down to target-consistent rates.

“But there are some signs that the process of wage disinflation may be slowing, so it’s too early to declare victory on inflation.

“It’s often been said that the last mile may be the hardest, and that’s where we are now.

She added: “This is why I support a gradual removal of monetary policy restriction and will be monitoring the flow of data over the coming months so we can calibrate our policy path as needed.”

Few in the money markets expect the Bank to cut interest rates for a third time this year, from its 4.75% level, at its final 2024 rate-setting meeting on December 19.

This was Lombardelli’s first speech as deputy governor for monetary policy since she took up her post on 1 July for a five-year term succeeding Ben Broadbent.