An increase in energy prices pushed UK inflation to its highest rate for six months, according to figures released today [November 20]
The inflation rate, which measures price changes over time, hit 2.3% in the year to October, a bigger-than-expected increase from 1.7% in September, and is the sharpest month-on-month increase in the rate of inflation for two years.
ONS chief economist Grant Fitzner said:
“Inflation rose this month as the increase in the energy price cap meant higher costs for gas and electricity compared with a fall at the same time last year.
“These were partially offset by falls in recreation and culture, including live music and theatre ticket price.
“The cost of raw materials for businesses continued to fall, once again driven by lower crude oil price.”
Kate Nicholls, Chief Executive of UKHospitality, said:
“This higher-than-expected level of inflation is an ominous warning of what could come in April, when businesses across the country will be hit by significant cost increases.
“Hospitality is braced for its own £3.4 billion cost increase, and that will impact jobs and push up prices, which we know will be a struggle for customers.
“The reality is that businesses are unable to absorb any more cost, having taken on so much over the past four years, and it is consumers and team members that will feel the effects.
“If the Government wants to keep a lid on inflation, protect jobs and help businesses, it must urgently rethink its changes to employer NICs.
“I am calling for them to protect businesses and staff by introducing either a new employer NICs band for lower earners or implement an exemption for lower band taxpayers working fewer than 20 hours per week.”
The announcement today means inflation is back above the Bank of England’s two per cent target and experts believe it is now likely to reduce the already low chances of another base rate cut in December.
