UK inflation rises to 10.1% as food prices and energy bills surge

The rate of inflation has risen above 10% for the second time this year as the economy reels from the effects of rising food and energy prices.

The Office for National Statistics (ONS) said the consumer price index rose to 10.1% in September, returning to double figures after a slight dip to 9.9% in August.

It was above the expectations of economists, who had predicted a figure of 10%. The figure matches the 40-year high inflation hit in July and remains well above the government’s target of 2%.

The increase was driven by surging food prices, leaping by 14.5% compared with the same month last year, representing the largest annual rise for 40 years.

ONS director of economic statistics Darren Morgan 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.

“These rises were partially offset by continuing falls in the costs of petrol, with airline prices falling by more than usual for this time of year and second-hand car prices also rising less steeply than the large increases seen last year.

“While still at a historically high rate, the costs facing businesses are beginning to rise more slowly, with crude oil prices actually falling in September.”

Chancellor Jeremy Hunt said the government would prioritise help for the vulnerable after the latest inflation rise.

The figure is usually used as the benchmark to raise benefits and the state pension, but the government has refused to confirm that payments will keep pace with rising prices.

Mr Hunt said: “I understand that families across the country are struggling with rising prices and higher 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.

“We have acted decisively to protect households and businesses from significant rises in their energy bills this winter, with the government’s energy price guarantee holding down peak inflation.”

Confederation of British Industry principal economist Martin Sartorius said the rising inflation figure underlined the need for the government to give more details on its revised energy support package.

He said: “Inflation returned to its recent 40-year high and is expected to grow further in October as energy bills rise in line with the government’s energy rice guarantee.

“While the Chancellor’s statement on Monday seems to have restored some fiscal stability, adjustments to the energy price guarantee suggest inflation may yet remain higher for longer.

“The prospect of household energy bills rising sharply again in April 2023 emphasises the need for government to set out the details of any future targeted support sooner rather than later, in addition to how the country will establish its longer-term energy security.”

Joshua Raymond, Director at online investment platform XTB.com, added: “This marks the fourteenth consecutive monthly rise in annual food inflation, with prices continuing to grow at an alarming pace. This spells yet more trouble for families who face their weekly grocery shop becoming more expensive with each passing month and with mortgage rates rising at their fastest pace in years, the cost of living crisis is well and truly entrenched in the UK economy.

“Perhaps equally troubling is core inflation, which strips out food and energy prices and also rose faster than expected to 6.5%. This shows inflationary pressures remain broad and deep. The Bank of England expects inflation to top out at 11% in the coming months, yet these reports may show there is further room for inflation to grow above this, especially given the weakness of the pound compared to its historical value.”