UK inflation has jumped to a 10-year high of 4.2%.
Inflation has risen 3.1% in September and is higher than analyst expectations.
The inflation rate was driven higher by the cost of electricity, gas and other fuels. Also driving up inflation was petrol prices. Average petrol prices in October were 138.6 pence per litre, which is an increase from 113.2 pence per litre a year earlier.
“In April 2020, the energy price cap had been reduced causing electricity, gas and other fuels’ contribution to the CPIH headline rate to fall to negative 0.20 percentage points. But this fall was reversed in April 2021 with rises in gas and electricity prices,” said the ONS.
“The further price rises in October 2021 have compounded the April 2021 increases, resulting in 12-month inflation rates of 18.8% for electricity and 28.1% for gas. These are the highest annual rates for these classes since early 2009.”
Commenting on the rise in inflation, ONS chief economist said: “Inflation rose steeply in October to its highest rate in nearly a decade. This was driven by increased household energy bills due to the price cap hike, a rise in the cost of second-hand cars and fuel as well as higher prices in restaurants and hotels.”
“Costs of goods produced by factories and the price of raw materials have also risen substantially and are now at their highest rates for at least 10 years.”
Danni Hewson, AJ Bell financial analyst, commented on the latest figures: “Anybody responsible for paying the household bills won’t be surprised by today’s inflation number. 4.2% might be slightly above where it had been predicted to fall for October but just look at the prices motorists are paying at the petrol pumps, the demand for used cars sky-rocketing and of course the wholesale cost of gas which continues to put small suppliers out of business.”
“The energy cap which protects consumers from those price hikes was itself a contributor to this month’s inflation figures as it rose substantially just as the temperatures began to fall and nights closed in.”