UK Inflation hits 5 year high

In September, UK inflation reached its highest point in more than 5 years, with the Consumer Prices Index climbing to 3% for the month.

This is the first time inflation has reached 3% since April 2012 and shows a further increase on the 2.9% recorded for August.

The increase was driven predominantly by “increases in transport and food prices”, while , Governor of the Bank of England Mark Carney said that the rate is likely to keep rising due to the current weakness of the pound. “The sole reason that inflation has gone up as much as it has is the depreciation of sterling and it raises the likelihood of an increase in interest rates next month”. Interest rates currently stand at 0.25%.

The Guardian says the increase is bad news for workers, “as average wages only rose by 2.1% per year in the three months to July”, but that pensioners “can look forward to a 3% increase in the basic state pension next April”, as pensions rise in line with earnings growth under the triple-lock system.

Head of inflation at ONS Mike Prestwood told the BBC that: “Food prices and a range of transport costs helped to push up inflation in September. These effects were partly offset by clothing prices that rose less strongly than this time last year.”

Source: Insight DIY Team