UK inflation has dipped slightly, however, still remains above the Bank of England target.
In August inflation hit its highest rate in nine years but has since dipped back down to 3.1% in September.
“Annual inflation fell back a little in September due to the unwinding effect of last year’s ‘Eat Out to Help Out,’ which was a factor in pushing up the rate in August,” said Mike Hardie, who is the head of prices at the Office of National Statistics.
“However, this was partially offset by most other categories, including price rises for furniture and household goods and food prices falling more slowly than this time last year.”
The Bank of England has said that it expects inflation to jump to 4% next year.
The inflation report found petrol prices to jump to an eight-year high. The cost of petrol in September was 134.9p per litre, which is 113.3p per litre the same period a month earlier.
Analysts highlighted the problems facing the Bank of England who face inflation well above their target but now begins to fall back.
“The debate surrounding temporary versus persistent inflationary pressure intensifies this morning as the September inflation rate remained above target, 3.1% in the 12 months to September 2021 – down from 3.2% in August,” said Sukhdeep Dhillon, Senior Economist at BNP Paribas Real Estate.
“Although temporary factors continue to push up inflation, the rate is likely to remain elevated over the next two years, and this, combined with slowing output and an earlier than anticipated potential rate hike is creating a real tightrope for the Bank of England to walk.”