The rate of inflation in the U.K. has reached its highest level since 2011
The consumer prices index rose to 4.2 per cent last month led mostly by energy bills with gas, electricity and petrol
The ONS said average petrol prices hit their highest since September 2012, at 138.6 pence per litre in October compared with 113.2 pence per litre a year earlier.
Grant Fitzner, chief economist at the ONS, says:
“Inflation rose steeply in October to its highest rate in nearly a decade.
“This was driven by increased household energy bills due to the price cap hike, a rise in the cost of second-hand cars and fuel as well as higher prices in restaurants and hotels.
“Costs of goods produced by factories and the price of raw materials have also risen substantially and are now at their highest rates for at least 10 years
Price rises are now more than twice the rate set by the Bank of England and there are signs that the rise will continue with raw material prices into manufacturers rising by 13 per cent in the last 12 months
Jack Leslie, Senior Economist at the Resolution Foundation, said:
“The global economic recovery has caused a rapid rise in inflation that families are feeling at the petrol pump, in their energy bills, and in their pay packets. With inflation forecast to hit 5 per cent by next Spring, we could be set for a sustained period of shrinking pay packets.
“While painful for households, the fact is that the global nature of these inflationary pressures mean that traditional tools such as raising interest rates are likely to have little effect.
“Instead, we need to focus on securing the as yet incomplete Covid recovery so that stronger growth creates more scope for higher pay rises.”
