Inflation hit 11.1%

Inflation hit 11.1 per cent in October, reaching a 41-year high on rising energy and food prices. The Office for National Statistics said inflation was at its highest level since October 1981, with a rate of 10.1 per cent in September. Economists polled by Reuters had expected a rate of 10.7 per cent for October. The rise in prices in October presents a problematic backdrop for Chancellor Jeremy Hunt’s Autumn Statement today. It suggests the Bank of England will have to raise interest rates further to bring inflation down to its 2 per cent target.

The BoE is expected to increase rates by 50 basis points next month from 3 per cent. According to the ONS, food price inflation rose sharply to 16.5 per cent in October, the highest for 45 years. However, the one relatively bright spot in the figures was that core inflation, excluding food and energy, held steady at 6.5 per cent in October, the same rate as in September. Economists had been hoping this measure would dip to 6.4 per cent in October.

Hunt blamed Russia’s war in Ukraine for the deepening cost of living crisis but pledged to take «tough but necessary decisions on tax and spending» in the Autumn Statement to curb inflation. «We cannot have long-term, sustainable growth with high inflation,» he said. «Tomorrow, I will set out a plan to get debt falling, deliver stability and drive down inflation while protecting the most vulnerable». Economists said inflation might have peaked and could fall in the months ahead, although they warned that any decline would likely be slow.

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