UK inflation hits 41-year high of 11.1% as food and energy prices continue to soar

U.K. inflation hit a 41-year high of 11.1% annually in October, as household energy bills and food prices continued to soar.

Inflation in the UK rose to a 41-year high in October as food, transport and energy prices continued to squeeze households and businesses.

The consumer price index increased at an annual rate of 10.7% in October, up from a 40 year high of 10.1% in September, according to a report by the Bureau of Labor Statistics.

According to the Office for National Statistics, the biggest upward contributions came from electricity, gas and other fuels.

The estimate for the annual inflation rate was 11.2% in October 1981 according to the ONS.

In October, the inflation rate was the same as in the previous year.

The cost of housing and household services rose by an all-time high of 11.7% in the 12 months to October 2022.

The average household is paying 88.9% more for their electricity, gas, and other fuels than they were a year ago.

In October 2022, domestic gas prices will be more than double what they were a year ago.

In the 12 months to October, food and non-alcoholic beverages rose by 16.4%, their highest annual rate in 37 years.

According to the Bank of England, the country is in a recession for the first time, while the government and central bank are trying to control inflation.

The Bank raised interest rates by 75 basis points, its largest hike in 33 years, but challenged the market's pricing of future rate increases.

The Bank of England has said that only modestly higher interest rates will be needed to bring inflation back to 2%.

We aren't so sure. Bell said that the inflationary pressures came from the tight labour market.

Wage growth continued to push higher despite vacancies and employment easing marginally. Workers may still ask for more pay to protect their disposable income as headline inflation is expected to stay elevated for some months.

The Bank of England will have to keep hiking until there is evidence that weaker activity is weighing on wage demands.

Jeremy Hunt is expected to announce substantial tax hikes and spending cuts in a bid to plug a £50 billion hole in the country's public finances.

As Hunt looks to exploit rising inflation to boost the Treasury's coffers, the government is expected to freeze tax thresholds and allowances.

"Anything is possible tomorrow, but if the government chooses to rely on continuing high levels of inflation as expected, it would likely be a safe bet."

It is unlikely that a fall in inflation will happen any time soon, as the dip in inflation seen in August looks to have been a mistake.