In spite of surging petrol prices and lorry driver shortages, the rate of UK inflation decreased in September, according to the Office for National Statistics (ONS). This is the final snapshot before the Autumn Budget next week.
The consumer prices index dropped to 3.1 per cent, from 3.2 per cent in August, as the impact of the Government’s ‘Eat Out to Help Out’ scheme fell out of the estimate for the annual inflation rate.
Petrol prices were the highest they’d been in eight years, creating higher pressure on living costs for households. Other notable costs that increased were:
- Food
- Drinks
- Used cars
- Air travel
On average, the price of petrol stood at 134.9p a litre, rising from 113.3p the year prior, and being the highest since 2013.
Further pressures on living costs are to be expected in October, analysts have warned. This is a result of:
- Increasing wholesale gas and electricity prices
- The removal of Ofgem’s consumer price cap on household bills
According to The Bank of England, this rise in energy costs will see inflation grow above four per cent this winter, with the rising cost of living predicted to remain raised until at least the Summer of 2022.
Economists have said the inflation rate will gradually reduce back towards the Bank’s two per cent target rate in the latter part of next year, as the temporary interference related to Covid-19 dissolves.
A 3.1 per cent increase is expected next year, due to the September inflation reading used by the Government to uprate the following:
- Value of benefit payments each year
- State pensions
- Business rates
Rishi Sunak said the Government had put in place a £500 million support fund to assist vulnerable households. The Chancellor added: “Global shocks have pushed up prices around the world, and we are working with businesses and international partners to address these pressures.”
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