The UK Consumer Price Index (CPI) rose to its highest level since 1981 in October, hitting 11.1% – an increase of 100 basis points on September’s 10.1% figure.
The rise was largely attributed to soaring gas, electricity and food prices, while core inflation remained at September’s 6.5% high – the highest core inflation figure seen since 1997.
CPI first rose above the 10% mark in July, before dipping to 9.9% in August.
AJ Bell’s head of personal finance Laura Suter, said: “Buried in the details of the data are some alarming facts. In the past month alone we saw the same increase in prices that we did in the entire year to July last year. On top of that, energy costs have risen by almost 90% in the past year, with gas prices more than double what they were a year earlier. That clearly is unsustainable for families.
“The government’s Energy Price Guarantee had been heralded as a way to keep inflation down, but the ONS figures show that it didn’t have the huge limiting effect that many claimed. It projects that inflation would have hit 11.8% in October had the cap on energy costs not been introduced.
“And it’s not just energy costs rising – food prices have shot up again, seeing the highest inflation for this category in more than 45 years. Anyone who has done their weekly shop will feel this keenly, and while many are trading down and ditching the brand names, others are simply having to go without.”
All eyes on Autumn Statement
After the latest inflation figures were announced, all eyes turned to Thursday’s Autumn Statement, through which commentators have predicted a range of tax increases and public spending cuts will be revealed.
Victoria Scholar, head of investment at Interactive Investor, said: “Inflation continues to be the most pressing near-term economic challenge facing the Bank of England and the government, which no doubt chancellor Jeremy Hunt (pictured) will focus on in his Autumn Statement tomorrow. He has already said this morning ‘we cannot have long-term sustainable growth with high inflation.’
“The government is looking at a raft of spending cuts and tax increases in a contractionary fiscal plan that will support the Bank of England’s rate hiking trajectory, as both aim to bring inflation back down under control.”
Gam investment director Charles Hepworth observed that October’s CPI figures show UK inflation “remains on fire”. “Let’s not forget, inflation would have been even higher were it not for the UK government’s energy price cap,” he added.
“The bigger test to the current stagflationary shock in the UK will likely be chancellor Hunt’s budget statement tomorrow, which promises further austerity and tax rises across the board. The outlook is grim for the economic fortunes of the UK – so far, the promised Brexit ‘sunlit uplands’ have only been a continual rolling season of discontent.”