UK inflation jumps to 11.1% on back of energy and food price rises
The UK’s annual inflation rate hit a 41year-high of 11.1% last month even as help was provided to households by the introduction of the government’s energy price guarantee.
Dearer food also contributed to a 2% jump in prices in October alone, helping to push the increase in the cost of living over the previous 12 months to a level not seen since October 1981.
The Office for National Statistics (ONS) said households were paying 90% more for gas, electricity and other fuels than they were a year earlier. Food price inflation rose from 14.6% to 16.4% – its highest level since 1977.
A rise in inflation had been anticipated by the City but the rise in the annual rate from 10.1% in September was markedly steeper than the 10.7% figure economists had forecast and was an unwelcome piece of news for Jeremy Hunt before Thursday’s autumn statement.
Responding to the figures, the chancellor, said: “We cannot have long-term, sustainable growth with high inflation. Tomorrow I will set out a plan to get debt falling, deliver stability, and drive down inflation while protecting the most vulnerable.”
The ONS said the introduction of the energy price guarantee for households, initially set for two years and since reduced to six months, limited the rise in electricity, gas and other fuels prices to 24.3% between September and October, with gas prices rising by 36.9% and electricity prices by 16.9%.
Without the guarantee, the rise would have been 75% and the overall annual inflation rate 13.8%, it added.
Inflation as measured by the consumer prices index stood at 4.2% in October 2021 but has moved steadily higher over the past 12 months. Core inflation, which strips out food, energy, tobacco and alcohol, remained unchanged at 6.5%.
The rise was anticipated by the Bank of England in its latest quarterly monetary policy report. Threadneedle Street said inflation would remain high and only fall back towards 10% in the first three months of 2023.
The ONS chief economist, Grant Fitzner, said: “Rising gas and electricity prices drove headline inflation to its highest level for over 40 years despite the energy price guarantee. Over the past year, gas prices have climbed nearly 130% while electricity has risen by about 66%.“Increases across a range of food items also pushed up inflation. These were partially offset by motor fuels, where average petrol prices fell on the month, while the price for diesel rose taking the disparity in price between the two fuels to the highest on record. “There was further evidence that costs facing businesses are rising more slowly, driven by crude oil and petroleum prices.”