The rate of inflation hit an equal 40-year high of 10.1 per cent in September as soaring food prices forced up the cost of living.
The Consumer Prices Index - the headline measure of inflation - rose from 9.9 per cent to 10.1 per cent, the same level it reached in July and the joint highest level since 1982. Prices rose by 0.5 per cent during September, according to the office for National Statistics (ONS).
Food prices soared by 14.6 per cent, the fastest rate of increase in 40 years, while the cost of eating out and staying in hotels went up by 9.7 per cent.
ONS Director of Economic Statistics Darren Morgan said: “After last month’s small fall, headline inflation returned to its high seen earlier in the summer. The rise was driven by further increases across food, which saw its largest annual rise in over 40 years, while hotel prices also increased after falling this time last year.
“These rises were partially offset by continuing falls in the costs of petrol, with airline prices falling by more than usual for this time of year, and second-hand car prices also rising less steeply than the large increases seen last year.
“While still at a historically high rate, the costs facing businesses are beginning to rise more slowly, with crude oil prices actually falling in September.”
The latest rise in inflation puts even more pressure on the Bank of England to order a huge hike in interest rates next month to rein it back on. City traders expect the Bank’s rate to go up by as much as a full percentage point. Fixed mortgage rates have already risen sharply in anticipation of the Bank’s more with two year fixes passing 6.5 per cent on Tuesday.
Chancellor of the Exchequer, Jeremy Hunt said: “I understand that families across the country are struggling with rising prices and higher energy bills.
“This government will prioritise help for the most vulnerable while delivering wider economic stability and driving long-term growth that will help everyone
“We have acted decisively to protect households and businesses from significant rises in their energy bills this winter, with the government’s energy price guarantee holding down peak inflation.”
Shadow Chancellor Rachel Reeves said: “Inflation figures this morning will bring more anxiety to families worried about the Tories lack of grip on an economic crisis of their own making.
“It’s clear that the damage has been done. This is a Tory crisis, made in Downing Street and paid for by working people.
“The facts speak for themselves. Mortgage costs are soaring. Borrowing costs are up. Living standards down. And we are forecast to have the lowest growth in the G7 over the next two years.
“What we need now is to restore financial credibility, and a serious plan for growth that puts working people first. That is what Labour will bring.”
