Inflation holds steady at 6.7 per cent

Inflation in the UK unexpectedly held steady in September at 6.7 per cent as soaring fuel costs offset the first monthly fall in food prices for two years, show figures released today (18).

According to Office for National Statistics, annual inflation rate as measured by the consumer prices index remained unchanged from August’s reading, raising questions over the Bank of England’s next decision on interest rates in November.

Food and non-alcoholic drink prices fell by 0.2 per cent on the month – the first monthly decline since September 2021 – helped by fierce competition among supermarkets driving down prices for milk, cheese and eggs, as well as mineral water, soft drinks and juices.

However, prices still remain significantly higher than a year ago, with the cost of an average food shop still up by more than 12 per cent on an annual basis. The pressure is starting to ease and on a monthly basis food prices fell by 0.1% between August and September, led by dairy produce and soft drinks. The only food category that went up was fish, led by frozen prawns.

Surge in petrol and diesel prices contributed to almost all of the upward pressure on the inflation rate, amid a sharp rise in global oil costs over recent months, the ONS said.

Between August and September, petrol rose to an average of 153.6p per litre and diesel by 6.3p to 157.4p per litre.

The price of oil rose last month after Saudi Arabia and Russia, members of the Opec+ cartel of oil-producing nations, decided to cut production to support the global market. Events in Israel and Palestine have sparked fears of further increases.

Commenting on the figures, Chancellor Jeremy Hunt, said, “As we have seen across other G7 countries, inflation rarely falls in a straight line, but if we stick to our plan then we still expect it to keep falling this year. Today’s news just shows this is even more important so we can ease the pressure on families and businesses.”