Inflation has risen to 5.2%, its highest level for three years, mainly due to soaring gas and electricity bills, new figures released this morning show.
The increase will pile more pressure onto hard-pressed households as average wage increases are trailing rising prices.
Today’s figures highlight the risk to the Bank of England, which recently announced it is to pump more money into the economy – which in turn threatens to push inflation up further.
The Bank expects inflation to drop sharply next year when one-offs, like the VAT hike, fall out of the equation and the weak economy dampens wage and price increases.
Today’s figures from the Office for National Statistics (ONS) show consumer prices rose 0.6% last month, taking the annual inflation rate to its highest since September 2008. The figure took analysts by surprise – many had been expecting it to stay below 5%.
Price rises of four of the six large utility companies have been factored into the inflation figure by the ONS.
Bills for gas, electricity and other fuels rose 18.3% on the year in September, while transport costs were up 12.8%. Food prices were 6% higher than last year.
