Inflation has risen above 10 per cent for the second time this year, largely driven by food price increases.
UK inflation, measured by the Consumer Price Index (CPI), was 10.1 per cent in September, the same rate as it was in July – and up from 9.9 per cent in August.
The rate of CPI is normally used as the benchmark to raise benefits and the state pension, but the Government has refused to confirm that payments will keep pace with rising prices.
Economists and the shadow chancellor have raised concerns about the impact the rise in inflation will have on ‘already struggling’ families.
The shadow chancellor Rachel Reeves warned the new figures will bring ‘more anxiety to families already struggling amid the cost-of-living crisis’, while Jack Leslie, senior economist at the Resolution Foundation, said that the ‘bleak outcome means family incomes will continue to fall sharply against next year.’
Leslie explained, ‘Surging food prices have driven a return to double-digit inflation across Britain and high inflation looks set to stay with us for some time too, with accelerating services-producer price inflation and the early end of the energy price guarantee likely to put upward pressure on consumer prices next year.
‘While the significant Treasury savings may look tempting in the context of its attempts to fill its fiscal hole, the cost to 10 million working-age families and almost every pensioner would be huge amid the deepest cost of living crisis for half a century.’
Rebecca McDonald, chief economist for the Joseph Rowntree Foundation, commented, ‘The cost of living has millions fearing for the future, with the price of food rising faster than at any point since 1980. Any certainty they once had is now in jeopardy. This Government surely cannot wish to be remembered for withholding either cash or stability from families when the basic rate of benefits is already at its lowest in real terms for 40 years - and prices are bringing fear and alarm to millions. The majority of the public believe that benefits need to be uprated in line with inflation.
‘It is morally indefensible that the Government should still be considering leaving people with even less ability to pay for what they need, when their own party pledged to make sure the value of benefits keeps up with prices only months ago. The Chancellor has it in his power to assuage the fears of millions, by confirming today that benefits will be uprated in full and ahead of April.’
Responding to the inflation rate, the Chancellor said, ‘I understand that families across the country are struggling with rising prices and higher energy bills.
‘This Government will prioritise help for the most vulnerable while delivering wider economic stability and driving long-term growth that will help everyone.’
The news comes after the chancellor announced the energy price guarantee will be scaled back from two years to six months, and amid reports that blackouts could be imposed on British households in January and February due to energy shortages.
