U.K. inflation jumped back over 10% in September, matching highest rate seen in 40 years

London — British inflation jumped back above 10 percent in September on soaring food prices, official data showed Wednesday, with the country gripped by a cost-of-living crisis bedeviling the government. The Consumer Prices Index accelerated to 10.1 percent on an annual basis, up from 9.9 percent in August, the Office for National Statistics said in a statement.

The September rate matched the level in July and is the highest in 40 years as a result also of sky-high energy bills.

MoneyWatch: Inflation in U.K. hits new 40-year high, at 10.1%


“I understand that families across the country are struggling with rising prices and higher energy bills,” Britain’s new finance minister Jeremy Hunt said in a separate statement. “This government will prioritize help for the most vulnerable while delivering wider economic stability and driving long-term growth that will help everyone.”

The government has been rocked by chaos in markets in the wake of a budget that pledged tax cuts that would have been funded by state debt. Most of those measures have since been reversed, leaving Prime Minister Liz Truss fighting to save her job.

Britain’s Prime Minister Liz Truss looks down during a press conference in the Downing Street Briefing Room in central London, October 14, 2022, following the sacking of the finance minister in response to a budget that sparked chaos in the financial markets.


Following widespread criticism over the budget, Truss sacked Hunt’s predecessor, Kwasi Kwarteng, after less than six weeks in the role.

Analysts said Wednesday’s data would put pressure on the Bank of England to keep raising its main interest rate by sizeable amounts. Capital Economics noted that the BoE could hike its rate by as much as one percentage point to 3.25 percent at its next meeting in November.

Britain Economy
People walk past the Bank of England in London, September 28, 2022.

Frank Augstein/AP

Victoria Scholar, head of investment at Interactive Investor, said inflation was “the most pressing economic problem facing the Bank of England as well as the government.

“Without price stability, the cost-of-living crisis will continue to weigh on the economy by squeezing household budgets and dampening business margins.”

In a bid to help households, the government has capped domestic energy bills until April. However, the original plan was for a cap until late 2024, which Truss pulled earlier this week.

U.K. Prime Minister Liz Truss faces questions over energy plan


Markets were left spooked that a budget of tax cuts and a costly energy-price cap would add massively to British debt that had already ballooned on government support during the COVID-19 pandemic.

Her budget sent the pound plunging to a record-low against the dollar and caused yields on government bonds to soar – forcing Truss into a huge budget U-turn that has calmed markets.

Following Wednesday’s data, the pound was down against the dollar and euro, while London’s FTSE 100 shares index steadied at the open.

Source link






Leave a Reply

Your email address will not be published. Required fields are marked *