The UAP Group

UK inflation jumps to a 41-year high of 11.1%.

Soaring energy costs drove UK inflation to a fresh high in October, the latest piece of bad news for an economy sliding into recession.

The annual rate of inflation rose to 11.1% in October, up from 10.1% in the 12 months to September, the Office for National Statistics said on Wednesday. The sharp increase in living costs was caused by rising gas and electricity prices, despite a government energy price guarantee, which caps energy bills at £2,500 ($2,970) for the typical household. Food price inflation rose to 16.4%.

“Over the past year, gas prices have climbed nearly 130% while electricity has risen by around 66%,” ONS chief economist Grant Fitzner said in a statement.

Andrew Bailey, governor of the Bank of England (BOE), during the Monetary Policy Report news conference at the bank's headquarters in the City of London, UK, on Thursday, Nov. 3, 2022. The Bank of England raised interest rates by the most in 33 years but strongly pushed back against market expectations for the scale of future increases, warning that following that path would induce a two-year recession.

Bank of England sets biggest rate hike in 33 years and warns of a long recession

The prices of goods and services bought or consumed by UK households increased by 2% between September and October, according to the ONS. That means that in the space of one month, prices rose by as much as they did in the entire year to July 2021. The acceleration in inflation even as the economy weakens presents a conundrum for policymakers because Britain’s economy is expected to suffer as the Bank of England keeps raising borrowing costs to cap rising prices.

The Office For National Statistics announced that September's retail sales volumes have fallen by 1.4% much more than expected as households cut back spending in the face of rising borrowing and energy costs. The mourning period following Queen Elizabeth II's death was also considered a factor. Meanwhile, public sector borrowing hit £20 billion in September, compared with the £17.1 billion forecast.

Rising prices in Britain contrast with cooling inflation in the United States. The US Consumer Price Index rose 7.7% for the year ending in October, a slower pace of increase than the 8% economists had expected and January.

https://lnkd.in/ethNADqJ

For more on this story and further statistics regarding inflation within the UK economy, please click on the link above.