Inflation returns to 40-year high of 10.1%
19th October 2022 08:38
by Myron Jobson from interactive investor
Runaway prices in tandem with the rising cost of borrowing continue to hit people’s pockets hard.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “Inflation returned to a 40-year high of 10.1% in September, causing pain for many households. Rampant inflation in tandem with the rising cost of borrowing continue to hit people’s pockets hard.
“The biggest contributor to the annual CPI rate in September was housing and household services, which includes occupiers’ housing costs, private rents, electricity gas and other fuels. Prices in this area increased by 0.3% on the month, compared with a smaller increase of 0.2% in September 2021. Another large jump in food prices boosted the headline inflation number. Food and non-alcoholic beverage prices are up 14.6% over 12 months and up from 13.1% in August. These types of inflation can be even stickier because consumers are resigned to paying it as they form part of essential.
“However, the combined upward contributions were partially offset by the continued fall in the price of motor fuels, which made the largest downward contribution to CPI inflation. While prices are still higher than a year ago, petrol prices fell by 8.7 pence per litre on the month and diesel prices fell by 5 pence per litre.
“High inflation is staying long past its welcome, but we might have to wait a little bit longer for a palpable reprieve. The government has reined in plans to help households with their energy bills, meaning bills could now rise sharply in April. Energy analyst Cornwall insights, the average annual energy bill could go up by 73% from £2,500 to £4,347 a year from April 2023.
“The pension triple lock commitment U-turn threatens to add insult to injury to hard-pressed pensioners, while higher mortgage rates will hit those seeking to remortgage.
“Rising prices eats into the amount many people have to save for everything else, whether that’s other living expenses, emergencies, leisure or saving for their future. It is important to remember that the headline inflation figure can dramatically differ from your own personal inflation number.
“Any savings you can make now will help you build up reserves for winter when you’ll really need it most - but that’s easier said than done in a cost-of-living crisis.”
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