UK inflation rises to 10.1% on back of soaring food prices | Inflation

Inflation in the UK has risen above 10% for the second time this year as households come under pressure from the sharpest annual rise in food prices for more than 40 years amid the cost of living crisis.

The Office for National Statistics (ONS) said the consumer prices index rose to 10.1% in September, returning to double digits after a slight dip to 9.9% in August. The figure was last higher in 1982. City economists had forecast a slightly smaller rise to 10%.

Soaring prices for food and drink were the biggest driver behind the latest cost of living increase, with an annual rise of almost 15%, the fastest annual jump since April 1980, as the price of bread and cereals, meat, milk, cheese and eggs shot up.

The September inflation figure is crucial as it is the one used to uprate pensions and benefits. However, there have been suggestions that the new chancellor, Jeremy Hunt, will break the Conservative party manifesto commitment to the triple lock – the guarantee that state pensions rise each year in line with inflation, average wage growth, or 2.5%, whichever is highest – so they may not end up being raised by 10.1%.

Darren Morgan, a director of economic statistics at the ONS, said: “After last month’s small fall, headline inflation returned to its high seen earlier in the summer. The rise was driven by further increases across food, which saw its largest annual rise in over 40 years, while hotel prices also increased after falling this time last year.”

The large price increases across a wide-ranging basket of goods and services were partly offset by a continuing fall in the price of petrol, as well as a sharper fall than usual for airline tickets for the time of year.

The ONS said costs facing businesses were also beginning to rise more slowly, reflecting a global fall in crude oil prices in September.

The figures come as households come under pressure from ballooning mortgage costs amid rising interest rates from the Bank of England and a sharp rise in UK government bond prices triggered by last month’s mini-budget.

In response to the financial market turmoil, Hunt this week made a screeching U-turn to reverse most of the unfunded tax cuts in Kwasi Kwarteng’s mini-budget, and dramatically cut the length of the government’s energy price freeze from two years to only six months.

Hunt said he understood households across the country were struggling with higher prices and rising energy bills. “This government will prioritise help for the most vulnerable while delivering wider economic stability and driving long-term growth that will help everyone.”

According to the latest snapshot from the ONS, electricity prices rose by 54% and gas prices by 95.7% in the year to September. It said it was considering whether the cut in the length of the government’s energy price freeze would affect the headline rate of inflation, and would make an announcement on 31 October – the same day as Hunt’s debt-cutting plan.

Rachel Reeves, the Labour shadow chancellor, said the latest figures showed the government had lost control of the economy amid a crisis of its own making.
“It’s clear that the damage has been done. This is a Tory crisis, made in Downing Street and paid for by working people.

“The facts speak for themselves. Mortgage costs are soaring. Borrowing costs are up. Living standards down. And we are forecast to have the lowest growth in the G7 over the next two years.”