Prices in the UK continued to surge in September as inflation beat expectation to hit 10.1%, matching July’s 40-year record high.
Inflation is now far outstripping wage increases adding to fears of a cost of living crisis with mortgages rates rising and energy bills set to jump again in April.
“Inflation is back in double figures, rising at almost twice the rate of wages, and stretching us all to breaking point. People on the lowest incomes wait in limbo to see whether their benefits will get the boost they need to stop their finances plummeting over a cliff edge,” said Sarah Coles, senior personal finance analyst, Hargreaves Lansdown
“Meanwhile, those on average incomes are facing an increasingly impossible challenge every month to make ends meet, and anyone with savings is watching inflation eat their money alive.”
The impact of of a weaker pound was the big driver of inflation in September as food prices became more expensive after sterling hit record lows against dollar following the announcement of the doomed mini-budget.
“CPI inflation came in at 10.1%: five times the Bank of England target. It is showing few signs of slowing. While food made the biggest contribution, largely because of sterling weakness, there were notable increases across the other categories, including household goods and restaurants and hotels,” said Rob Clarry, Investment Strategist at Evelyn Partners.
As Clarry says, inflation is now 5x the Bank of England’s target meaning they will be forced into a sizeable rate hike at the next meeting, and possibly into 2023.