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Latest Office of National Statistics (ONS) data has revealed that Inflation jumped to a 41-year high of 11.1% in October, exceeding expectations as food, transport and energy prices continued to squeeze households and businesses.
Economists had projected an annual increase in the consumer price index of 10.7%, and October’s print marks an increase from the 40-year high of 10.1% seen in September.
Commenting on the data , Kitty Ussher, Chief Economist at the Institute of Directors, said “October’s high inflation rate was anticipated, but it is still sobering to see the scale of the impact of high electricity and gas prices on domestic heating bills. Even with the introduction of the household Energy Price Guarantee, the price of household fuels rose by 25% on the month. Without the scheme, the increase in fuel bills would have been 75% in a single month giving an overall CPI inflation rate of 13.8%.”
“Continued rises in food costs, particularly dairy, also contributed to October’s high inflation rate, although this was partially offset by a falling contribution from transport – both petrol prices and the cost of second hand cars.”
“With the protective effect of the Energy Price Guarantee so apparent in the data, the Chancellor will now be under even greater pressure to maintain the scheme into the foreseeable future.”
Helen Dickinson, Chief Executive of the British Retail Consortium, said “With the energy price cap rising in October, households found their gas and electricity bills going up again, pushing inflation to a new high. Food prices, particularly for dairy, rose again, driven up by high fertiliser, animal feed, and global food costs. Many customers are keenly anticipating Black Friday deals and other promotions in the run up to Christmas, as they prepare to buy gifts and festive treats. Unfortunately, there are few signs the cost of living crisis will abate any time soon.”
“Tomorrow, the Chancellor will unveil the Autumn Budget, where he has the opportunity to provide support for struggling households and relieve some of the costs on retailers and their suppliers, which in turn put pressure on prices. Retailers face an £800m per year hike in business rates from April 2023, so urgent government action is needed to mitigate this and prevent even higher inflation in the new year. The Budget is also a chance to fix the broken transitional relief scheme, that forces retailers to pay far more business rates than they owe.”
Alpesh Paleja, CBI Lead Economist, said “Despite the higher energy price cap pushing inflation to another high, there are signs that we are reaching its peak. Global price pressures appear to be easing, and forecasts predict that inflation could fall from double digits to high single digits over the course of 2023. Next year’s outlook, however, is clouded by uncertainties: including the extent to which the labour market will loosen, and the status of domestic energy bills support beyond April 2023.”
“High inflation, alongside a weaker economic outlook, will make for some tough choices for the Chancellor during tomorrow’s Autumn Statement. While we all accept that the Chancellor needs to close the fiscal black hole and reinforce macroeconomic stability, he must not forget to implement more pro-growth policies, if we’re to avoid a decade of lacklustre growth.”
