UK Inflation Remains Unchanged at a 5-year High of 3%
According to the Office for National Statistics’ (ONS) latest Consumer Prices Index (CPI) measure, inflation recorded at 3% last month, the same as what was recorded in the month of September.
However, the figure expected to rise around 3.1% in the month, according to forecasters polled prior to the ONS releasing the latest figure today, which would have forced Bank of England (BoE) Governor Mark Carney to write a letter to Chancellor Philip Hammond explaining why inflation is so high.
The government has an inflation target of 2% with protocol dictating that the BoE must contact the Chancellor if inflation exceeds 3% or falls short of 1%.
The BoE expects CPI to peak at around 3.2% in the autumn.
The news came just after the interest rates were raised to 0.5% earlier this month and with soaring inflation adding more pressure to UK households grappling with sluggish wage growth.
Since last year’s Brexit referendum, the surge in prices is primarily due to the depreciation of the sterling, which has increased the cost of imported goods and services.
Year-on-year food prices rose to its highest level in the past 4 years, up 4.2% last month in contrast to a 3.4% expansion in September.
Electricity, gas and other fuels pushed 1.3% higher on a monthly basis, compared to 0.6% growth in the month of October 2016.
However, fuel prices fell by 0.4% month-on-month after climbing to 2.3% in October 2016.
The average price of a basket of goods and services, such as food, transportation and medical care measured by CPI.
“Inflation remains at a five-year high with rising food prices offset by a fall in the cost of fuel,” ONS head of inflation Mike Prestwood said in a statement.
“Rise in the costs of raw materials and goods, both leaving factories slowed where as crude oil and petroleum prices both are increasing less than at this time last year.”
The ONS’ Retail Prices Index (RPI) a separate measure of inflation was 4% last month, up from 3.9% in September.
A Treasury spokesperson said: “We understand that people are concerned about increases in everyday costs”.
That’s why we have cut taxes and introduced the National Living Wage, which has lifted the wages of the lowest paid by over 6% above inflation.
“It’s also why we are bringing in an energy cap to help people with the cost of household bills.”