Inflation soars from 3.1% to 4.2% in a month, ONS reveals

Inflation soars to highest rate in nearly a decade from 3.1% to 4.2% in a month – after 13% rise in manufacturing costs and gas prices rocketing 28% over last year

The rate of Consumer Price Index inflation increased to 4.2 per cent in October from 3.1 per cent in September, the Office for National Statistics said today.

It means inflation surged close to a ten-year peak – partly on the back of higher household energy bills – as it hit the highest level since November 2011. 

The ONS found there were 12-month inflation rates of 18.8 per cent for electricity and 28.1 per cent for gas – the highest annual rates for both since early 2009. 

The price of materials and fuels used by manufacturers rose 13 per cent in the year to October 2021 – up from the 11.9 per cent growth in the year to September 2021.

And the price of goods produced by UK factories rose 8 per cent in the year to October 2021, which is up from 7 per cent growth in the year to September 2021. 

The rate of CPI inflation increased to 4.2 per cent in October from 3.1 per cent in September

The ONS said the price of materials and fuels used by manufacturers rose 13 per cent in the year to October 2021. This is up from the 11.9 per cent growth in the year to September 2021

Grant Fitzner, chief economist at the ONS, said this morning: ‘Inflation rose steeply in October to its highest rate in nearly a decade.

‘This was driven by increased household energy bills due to the price cap hike, a rise in the cost of second-hand cars and fuel as well as higher prices in restaurants and hotels.

‘Costs of goods produced by factories and the price of raw materials have also risen substantially and are now at their highest rates for at least ten years.’

It comes after a Reuters poll of economists had pointed to a reading of 3.9 per cent. Today’s figure is more than double the Bank of England’s 2 per cent target.

The ONS said the price of goods produced by UK factories rose 8 per cent in the year to October 2021. This is up from the 7 per cent growth in the year to September 2021

The Bank of England is expected to become the first of the world’s major central banks to raise rates since the coronavirus pandemic swept the global economy.

Investors and economists are increasingly predicting that this will happen on December 16, after they decided to hold rates at 0.1 per cent on November 4.

On Monday Bank Governor Andrew Bailey said he was ‘very uneasy’ about the inflation outlook and that his vote to keep rates on hold had been a very close call.

Yesterday, data suggested Britain’s labour market was withstanding the end of the government’s furlough scheme, a key factor for the Bank and its decision on rates.  

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