Soaring food prices push UK inflation back above 10 per cent

The biggest jump in food prices since 1980 pushed British inflation back into double digits last month, matching a 40-year high hit in July in a new blow for households grappling with the cost-of-living crisis.

The Office for National Statistics said the consumer price index (CPI) increased by 10.1 per cent in annual terms in September, up from 9.9 per cent in August.

Food and non-alcoholic beverages prices were the biggest driver of inflation in September as they rose by 14.5 per cent, the biggest jump since April 1980 according to historic modelled estimates of the CPI.

Hotel prices also increased in September, the ONS said.

“Today’s release highlights the danger that underlying inflation remains strong even as the economy weakens,” said Paul Dales, chief UK economist at consultancy Capital Economics.

He pointed to rising core inflation, a measure that excludes volatile food and energy prices, which hit a new 30-year high of 6.5 per cent.

Britain has been hit hard by the surge in European natural gas prices caused by Russia’s invasion of Ukraine, which has added to post-COVID supply-chain bottlenecks and labour shortages, creating an intense squeeze on living standards.

“I understand that families across the country are struggling with rising prices and higher energy bills,” Chancellor Jeremy Hunt said in a separate statement.

“This government will prioritise help for the most vulnerable while delivering wider economic stability and driving long-term growth that will help everyone.”

The government has been rocked by chaos in markets in the wake a budget that pledged uncosted tax cuts.

The majority of those measures have since been reversed, leaving Prime Minister Liz Truss fighting to save her job.

Following widespread criticism over the budget, Truss sacked Hunt’s predecessor, Kwasi Kwarteng, after less than six weeks in the role.

Analysts said Wednesday’s data would put pressure on the Bank of England to keep raising its main interest rate by sizeable amounts.

Capital Economics noted that the BoE could hike its rate by as much as one percentage point to 3.25 per cent at its next meeting in November.