Inflation set to return to double-figures as food prices surge

According to economists, inflation is likely to have returned to double digits in September due to rising food prices.

The Office for National Statistics (ONS) is due to announce the latest increase in the cost of living for UK households on Wednesday morning.

Economists have predicted that consumer price index (CPI) inflation will have risen to 10% in September, compared to 9.9% in the previous month.

Despite the decline in gasoline prices, which fell around 4% during the month, according to Forex.com, and used car prices are likely to pick up.

Pantheon Macroeconomics experts have said this was likely to be offset by “further increases in food CPI inflation and services”.

Food inflation is expected to have risen to 14.3% from 13.1% in August.

September’s inflation data will be important for the Treasury as they earlier approved hikes on a number of key policies.

For example, the CPI rate is used as part of the Secretary of Labor and Pensions’ annual pension increase review.

If the government decides to increase benefits through inflation, this is the percentage by which they will be increased, this will come into effect from April next year.

The September inflation figure is also the one the department uses within the triple-locked pension commitment.

The triple lock means pensions will rise by the highest of three numbers: median earnings, CPI inflation based on the September rate, or 2.5%.

With average earnings recently at 5.4%, pensions are widely expected to rise at the rate of inflation in April next year.

On Tuesday, however, Downing Street hinted that ministers could abandon their commitment to the triple lockdown as new Chancellor Jeremy Hunt looks for further cuts to fill the government’s financial black hole.

The inflation rate is also used to decide on property tax increases for large corporations.

Business interest rates will rise by nearly £2.7 billion in England from April without government intervention if inflation hits the forecast 10% figure.

https://www.belfasttelegraph.co.uk/news/uk/inflation-set-to-return-to-double-figures-as-food-prices-surge-42078099.html Inflation set to return to double-figures as food prices surge

Linh

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