The inflation figures released on Wednesday 16 November 2022 by the Office for National Statistics (ONS) reported that the Consumer Prices Index (CPI) rose by 11.1% in the 12 months to October 2022, the highest rate since October 1981 and up from 10.1% in September. Core inflation – which strips out volatile items such as food, energy, alcohol, and tobacco – stood at 6.5% in the year to October, unchanged from the previous month.
Rising gas and electricity prices made the largest upward contribution to the change in CPI annual inflation rates between September and October, despite the introduction of the government’s Energy Price Guarantee (EPG) in the month. Rising food prices also made a large upward contribution to the headline rate.
The introduction of the EPG meant that overall electricity, gas and other fuels prices rose by 24.3% in October, with gas prices rising by 36.9% and electricity prices by 16.9%. The ONS estimated that without the implementation of the EPG, electricity, gas and other fuels prices would have risen by nearly 75% between September and October 2022 and overall CPI inflation would have increased to around 13.8% (rather than 11.1%). In October 2022, households were paying, on average, 88.9% more for their electricity, gas, and other fuels than they were paying a year ago. Domestic gas prices have seen the largest increase, with prices in October 2022 more than double those of a year earlier.
Food and non-alcoholic beverage prices rose by 16.4% in the 12 months to October 2022, up from 14.6% in September 2022. The annual rate of inflation for this category has continued to rise for the last 15 consecutive months, from -0.6% in July 2021. The current rate is estimated to be the highest since September 1977.
On a monthly basis, UK CPI rose by 2.0% in October 2022, compared with a rise of 1.1% in October 2021. Gas and electricity prices made the largest upward contribution to the monthly rate in October.
Responding to the UK inflation figures, Suren Thiru, Economies Director for ICAEW, said: “October’s hefty rise in inflation, fuelled by another punishing jump in energy bills, is pulling us closer to a damaging recession. Although it’s possible that the headline rate has now peaked, the Autumn Statement could significantly alter the outlook for inflation. While major spending cuts and tax rises could choke off demand in the economy, last month’s inflationary surge could be surpassed in April if the chancellor substantially scales back the energy support package.
“With inflation skyrocketing, another big interest rate rise in December looks likely. However, with a looming recession, tighter fiscal policy and stronger sterling set to subdue inflation, the case for aggressively tightening monetary policy should fade.”
For further information, read the ONS Consumer price inflation.
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