Britain’s inflation rate rose to a 40-year high of 10.1 per cent in September, as soaring food costs more than offset price declines at petrol pumps.
The jump in inflation as measured by the consumer price index exceeded economists’ expectations, rising from 9.9 per cent in August. It was driven by the highest food price increases in decades.
At more than five times the Bank of England’s 2 per cent target, the double-digit rate will also add to pressure on the central bank for a large interest rate rise on November 3.
The September inflation figures are also particularly important because they are normally used for increasing benefits and pensions the following April.
After the figures were released on Wednesday, Prime Minister Liz Truss confirmed in the House of Commons that state pensions would rise in line with inflation, but made no similar commitment to non-pensioner benefits.
With food prices rising at a multi-decade high of 14.6 per cent, economists said poorer families would be hit hardest.
George Dibb, head of the Centre for Economic Justice at the IPPR think-tank, said the “steeper rise in essentials such as food and drink where prices are now rising at over 14 per cent . . . underlines the need for greater support for the most vulnerable households this winter over and above the energy price cap”.
The details of the inflation figures showed there was an increase in the core index as well as higher food prices.
The Institute for Fiscal Studies estimated that, with food and energy prices rising fastest, inflation for the lowest-income tenth of the population was 12 per cent compared with 9 per cent for the richest tenth.
The core rate, excluding energy, food, alcohol and tobacco, which is closely watched by economists for signals of longer-term inflationary pressures, rose from an annual rate of 6.3 per cent in August to 6.5 per cent in September.
The Office for National Statistics, which released the figures, said the overall consumer price index rose 0.5 per cent in September compared with August, a larger increase over the month than in 2021 when the index rose only 0.3 per cent.
The BoE will need to weigh the additional price pressures against the government’s U-turns on unfunded tax cuts and less generous relief on household energy costs, which will reduce medium-term pressures on prices.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the “MPC still is a long way from being able to claim victory” over inflation, but urged the central bank to worry more about “weakening consumer demand and emerging slack in the labour market” than the current high level of inflation.
Paul Dales, chief UK economist at Capital Economics, said the rate of inflation would rise to 10.5 per cent in October and to 11 per cent in April once the government’s energy price guarantee expired.
“Today’s release highlights the danger that underlying inflation remains strong even as the economy weakens,” he said.