Inflation hits 40-year high of 11.1%
The Consumer Prices Index (CPI) rose by 11.1% in the 12 months to October 2022, up from 10.1% in September 2022, according to the Office for National Statistics (ONS).
The jump in inflation was higher than expected and largely due to increases in the cost of energy.
Food was cited as another major element adding inflationary pressure during October, rising at the fastest annual pace since 1977.
In October 2022, the CPI annual inflation rate was the highest annual CPI inflation rate in the ONS’ National Statistic series, which began in January 1997. Indicative modelled consumer price inflation estimates suggest that the CPI rate would have last been higher in October 1981, where the estimate for the annual inflation rate was 11.2%.
On a monthly basis, CPI rose by 2% in October 2022, compared with a rise of 1.1% in October 2021.
The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 9.6% in the 12 months to October 2022, up from 8.8% in September 2022. The annual inflation rate was last higher in the constructed historical estimates in December 1980, when it stood at 9.8%.
Bad, but it could have been worse
Ed Monk, associate director for Personal Investing at Fidelity International, says: “Inflation has once again exceeded the worst expectations and it will be little comfort to households that price rises would have been even worse than the 11.1 % recorded in October had it not been for the government’s giant intervention on energy prices.
“There were hopeful predictions that inflation could at last be peaking but you have to look very hard indeed for signs of optimism in today’s numbers. Producer price inflation in October was slightly below the level for September but input price rises are still rising at 19.2%. The fall for producer output prices was more hopeful, down to 14.8% in October from 16.3% in September.
“Sterling’s mild recovery, after a rollercoaster month and downward pressures from the government’s upcoming fiscal plans, could take some steam out of the headline rate from here. For households facing below inflation pay rises, likely recession and probable more pain from the Autumn Statement this week, it looks like a long winter ahead.”
‘Incredibly worrying times’
Joanna Elson, chief executive of the Money Advice Trust, said: “With inflation now at a 40-year high and rising prices far outstripping wage growth, these are incredibly worrying times. And for a significant proportion of people whose budgets have no stretch left, the pressing and sometimes impossible challenge of how to cover essential bills, including energy, food and housing costs is far more immediate.
“People on the lowest incomes, are being hit the hardest as incomes can’t keep up with the relentless rise in costs. It is now more important than ever that the Chancellor uses Thursday’s Autumn Statement to increase benefits in line with inflation and commits to supporting those in most need through the winter.”