The Office for National Statistics (ONS) revealed the increase, up from 10.1% in September, as the cost of light and heating for homes rose further despite help from the Government’s Energy Price Guarantee which caps wholesale charges for natural gas and drift. Food was cited as the other major factor adding to inflationary pressure in October. The ONS estimated the 11.1% reading was the highest since October 1981. It added that prices rose between September and October 2022 as much as they did in the entire year to July 2021. Economists polled by Reuters had expected inflation to rise to 10.7%. Rising energy prices have been the main driver of the cost-of-living crisis – largely a consequence of Russia’s invasion of Ukraine in February. Wholesale costs currently remain below conflict-era peaks, raising hopes that the worst of inflation is behind us. However, there is still a lack of clarity about supporting bills after April, when the energy price guarantee will be revised. More information could be given in the chancellor’s autumn statement to MPs due on Thursday. Jeremy Hunt is calling for the most vulnerable to be protected from the worst by increasing benefits and pensions in line with inflation, but has warned that we all face higher taxes to help balance the books. Use Chrome browser for more accessible video player 2:50 “Taxes will rise for everyone” The Bank of England had warned that inflation would have jumped above 13% last month without government intervention on energy bills, as average annual bills below the price cap set by Ofgem would have shot up to approximately £3,450. Policymakers were tipped by financial markets to push for a further 0.5 percentage point increase in Bank Rate when the rate-setting committee meets again this month. This would bring the rate to 3.5%. But the higher-than-expected inflation rate could mean a more aggressive rate hike is under consideration – piling further misery on borrowers. Use Chrome browser for more accessible video player 2:49 Is the UK on the brink of recession? The Bank has signaled that containing inflation is its priority, despite revealing last month that it expected the country was already in recession. Official data last week showed the economy contracted by 0.2% in the three months to September. The Bank has raised the outlook for seven more quarters of negative growth. Head of research for the British Chambers of Commerce, David Bharier, said separate ONS figures covering factory gate prices showed inflation had not yet peaked. “We’re talking to thousands of businesses who are telling us this is not sustainable,” he said. “Our research shows that confidence is falling fast as many SMEs find it almost impossible to absorb or pass on the rising costs. “While the Bank of England seeks to control inflation through further rate hikes, this is a blunt tool that fails to address the key drivers of inflation for most businesses: rising energy costs, global supply chain disruption and rising staff costs due to work. deficiencies. “Ahead of tomorrow’s autumn statement, businesses should see a clear plan from the chancellor to boost business investment and growth, as well as targeted measures to tackle the specific causes of inflation. “The UK economy, on the other hand, faces a deadly combination of recession and runaway inflation.”
