The cost of energy is driving UK prices up at their fastest rate for 41 years, continuing the squeeze on household budgets, according to BBC News.
Inflation, the rate at which prices rise, hit 11.1% in the year to October, up from 10.1% in September.
Soaring energy bills were behind the latest surge in prices, along with higher food and transport costs.
Soaring inflation is eating into people’s spending power and likely to push the UK into recession this year.
The latest inflation figure is the highest since October 1981 and comes ahead of Thursday’s Autumn Statement, which is expected to see Chancellor Jeremy Hunt announce public spending cuts and tax rises.
To calculate the inflation rate, the Office for National Statistics (ONS) keeps track of the prices of hundreds of everyday items, known as a “basket of goods”.
It said that despite the government limiting energy bill rises in October through the Energy Price Guarantee scheme, gas and electricity prices were still the driving force behind inflation.
However, the ONS estimated that without the support for bills, inflation would have risen as high as 13.8%.
Grant Fitzner, chief economist at the ONS, said that over the past year “gas prices have climbed nearly 130%, while electricity has risen by around 66%”.
As well as energy, the price of food and non-alcoholic drinks also surged, with costs up 16.4% in the year to October.
Paul Dales, chief UK economist at Capital Economics, said inflation – which has been rising for months – may have peaked “if the government continues to freeze [energy] prices in some way”.
“There is growing evidence that the upward pressure on core inflation from global factors is now fading,” he added.
“The recent falls in global agricultural commodity prices suggest to us that food inflation will soon start to ease.”
Higher energy costs affect businesses as well as households, and rising bills have forced some firms to put up their prices.
Several factors such as the war in Ukraine and the Covid pandemic have caused goods such as food, fuel and energy to become more expensive this year.
This has led to households cutting back their spending, which is dragging on the economy and causing it to shrink.
Latest figures showed the economy contracted by 0.2% between July and September and the Bank of England has warned the UK is facing a tough two-year recession.
A recession is defined as when an economy shrinks for two three-month periods in a row. It’s a sign an economy is performing badly, with companies often making less money and unemployment rising.
Image source: BBC News
