UK inflation driven to 40-year high

There has been a further leap in the inflation rate to a 41-year high of 11.1% last month, driven by the rise in energy bills.

The Office for National Statistics confirmed the increase, from 10.1% in September, as the cost of light and heating for homes rose despite the Government’s energy price guarantee which limits wholesale charges for gas and power.

Food was the other major factor adding inflationary pressure during October, but surging energy prices have been the main cause – mostly a result of Russia’s invasion of Ukraine.

There is still no clarity on the support for bills beyond April, when the energy price guarantee will be reviewed.

The Bank of England has said inflation would have risen above 13% last month without the Government energy bill intervention as average annual bills under the Ofgem price cap would have soared to about £3,450.

Policymakers had been expected to bring in a further 0.5 percentage point increase to the Bank’s interest rate when its rate-setting committee meets again this month.

That would take the rate to 3.5%. But the latest higher than expected inflation figure could mean a bigger rate rise is implemented – making life even more difficult for borrowers.

Click here to sign up to receive our new South West business news...