The squeeze on households intensified last month as the cost of living increased at the steepest rate since April 2012.
Inflation rose to 3% in September, its highest level in more than five years, the Office for National Statistics (ONS) said.
The Consumer Prices Index (CPI) measure of inflation rose from 2.9% in August thanks partly to higher food prices – adding to the squeeze on households as pay growth lags behind.
But the increase will be welcomed by those receiving the state pension, as the September figure is used to calculate increases in the benefit next April under the Government’s “triple lock” guarantee.
It is the first time CPI inflation has reached 3% since April 2012. The Bank of England targets inflation at 2%.
The CPI figure – which was in line with expectations – should bolster expectations that the Bank will hike interest rates next month, though some have cautioned against such a move at a time of tepid economic growth.
A slump in the pound since the Brexit vote last year, which makes imports more expensive, has contributed to rising inflation, though the ONS said increasing global commodity prices could also be a factor.
Bank of England governor Mark Carney told MPs on the Treasury Select Committee that a rise in inflation to more than 3% had been anticipated.
H/t reader Squodgy:
“With real inflation off the charts, housewives finding wage restrictions & minimum wage levels impossible to handle, it’s about time for a token acknowledgement that increases in costs are getting desperate.
Remembering that when the “average household shopping basket” is messed with if the inflation rate is deemed unacceptable for public consumption, and Draghi/Carney have doled out shedloads of paper money, itself an inflationary engine, an acknowledgement of a paltry 3% increase is quite a strong sign that things are far from good.”
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