Inflation rises to 11.1% – industry reaction

The latest UK Consumer Prices Index (CPI) figures, published by the Office for National Statistics, show that CPI rose to 11.1 percent in the twelve months to October, up from 10.1 percent in September

A jump in energy costs, despite the Energy Price Guarantee (EPG), and rising food prices, which rose by 16.4 per cent (the biggest annual increase since 1977), pushed CPI inflation to 11.1 per cent in October, and 12.5 per cent for low-income households.

As lower income households spend more of their budgets energy bills and food their effective inflation rate is higher than average: 12.5 per cent for the poorest tenth of households, compared to 9.6 per cent for the richest ten per cent. The Foundation calculates that this 2.9 percentage point cost-of-living gap is likely as its highest level since at least 2006 when records began. 

Joanna Elson, Chief Executive of the Money Advice Trust said “With inflation now at a forty year high and rising prices far outstripping wage growth, these are incredibly worrying times. And for a significant proportion of people whose budgets have no stretch left, the pressing and sometimes impossible challenge of how to cover essential bills, including energy, food and housing costs is far more immediate.”

“People on the lowest incomes, are being hit the hardest as incomes can’t keep up with the relentless rise in costs.  It is now more important than ever that the Chancellor uses Thursday’s Autumn Statement to increase benefits in line with inflation and commits to supporting those in most need through the winter.”

“These difficulties are not going away any time soon, however, and it is likely that support for the hardest hit will need to continue beyond the next few months. It is also vital that people are able to access the advice and support they need at this time.”

Rachelle Earwaker, Senior Economist for the Joseph Rowntree Foundation said “The Prime Minister claims fairness and compassion will be at the heart of his Government’s decisions tomorrow but, as these alarming figures show, struggling families will need more than well wishes this winter.”

“The cost of living has millions fearing for the future, contributed to by soaring cost rises for food, transport and energy. Every day sees still more stories of people selling their possessions, or borrowing money at punishing interest rates, just to afford these essentials.”

“When the Government sets out its plans tomorrow, benefits must at least be uprated in line with inflation as usual, as was promised when Rishi Sunak was Chancellor. As well as upholding that pledge, the uprating should be brought forward rather than expecting people to struggle on until April before their income reaches anything approaching the soaring cost of food.”

Jack Leslie, Senior Economist at the Resolution Foundation, said “Everyone in Britain is affected by double digit inflation – which has caused pay packets to shrink at record rates. But some groups are more effected than others, and Britain now has a significant cost-of-living gap between rich and poor households.”

“Rising energy bills and rapid food prices mean that low-income households now face an effective average inflation rate of around 12.5 per cent, while in the cold winter months, the over 80s are already facing inflation rates of around 15.3 per cent.”

“This shows why the Chancellor needs to protect vulnerable households through the ongoing cost-of-living crisis when he sets out his Autumn Statement.”