Britain's consumer prices rose in September from a year earlier, continuing their steep climb as the nation grapples with rapidly increasing food prices, high energy costs and political uncertainty.
The rate of inflation was the same as it was in July. In August, it was 9.9%. A reversal in the government's policy to hold down household energy bills has made the future path of prices even more uncertain.
The cost of food and hotels went up a lot in September. According to the Office for National Statistics, food prices increased by the largest amount in more than 40 years. Inflation grew at its fastest pace in decades due to high energy costs. Core inflation, which excludes food and energy prices, rose from 6.4 percent in August to 6.5 percent in September.Daily business updates The latest coverage of business, markets and the economy, sent by email each weekday.
Politicians and policymakers all over the world face the same problem of inflation. It is encouraging central bankers to go for higher interest rates in order to send a message that they won't let inflation get out of hand.
Changing fiscal policies are complicating the picture as governments try to support households through increases in the cost of living.
The Prime Minister of Britain promised to freeze household energy bills for the next two winters. Jeremy Hunt, Britain's new finance minister, scrapped much of Ms. Truss's economic agenda this week as he tried to restore calm in financial markets. Britons are guaranteed a freeze on their bills until April after Mr. Hunt reversed his policy. The government promised to come up with a plan to help people with their bills.
The economists at Pantheon Macroeconomics wrote in a research note this week that the headline rate of inflation would increase by five percentage points if households were forced to pay a price cap. The government is still working on a new plan to help with bills after April.
Since December, the Bank of England has raised interest rates. At its past two meetings, it raised rates by half a percentage point, double its previous moves, due to signs of broadening inflationary pressures in the labor market, where wages are rising and large numbers of people are not working.
While the central bank is expected to keep raising interest rates for several more months, analysts question how high rates can go and how long the increases will last as the British economy slows down The economy is expected to contract next year due to a decline in consumer spending.
The British economy would go from 3.6 percent growth this year to a 0.3 percent contraction next year as high inflation reduces purchasing power and tighter monetary policy takes a toll on consumer spending and business investment.
The central bank is expected to raise interest rates next year, according to traders.