The figure is just lower than the 10.1% recorded in August, giving rise to expectations that the United Kingdom may barely avoid a recession.
In the 12 months preceding August, the rate of inflation moderated to 9.9%, supported by a decline in fuel prices.
The Office for National Statistics stated that the decline in CPI from July’s 10.1% was primarily due to the decline in fuel prices.
However, the rise in food costs has been the primary reason why the total inflation rate has stayed elevated.
The most recent assessment of the consumer price index (CPI) comes against the backdrop of experts’ belief that further price hikes are imminent as winter approaches, aggravating the cost of living crisis.
Due to rising wholesale gas prices, the government’s planned energy bill assistance for homes and companies would only limit, not reduce, bills over the next winter months.
Next week, when the Bank of England meets to discuss interest rates, it will become obvious how this affects its inflation outlook.
Policymakers are largely expected to boost the Bank rate once more, probably by as much as 50 basis points to 2.25 percent, but they will reduce their inflation forecasts to account for the energy price guarantee.
According to Yael Selfin, chief economist at KPMG UK, the government’s intervention on energy bills might cause inflation to peak in October at 10.5%.
She added, “The combination of anticipated tax cuts and household support measures may drive the Bank of England to adopt a more hawkish approach to avert greater inflation in the future.”
This may result in harsher rate increases and higher interest rates to offset the inflationary effects of anticipated budgetary generosity.
The UK may “narrowly” avoid recession.
Ed Conway, economics and data editor for Sky, responded, “It is possible.
“Whereas earlier it appeared that we were facing a recession similar to the early 1990s, it is now possible that we will narrowly avoid that.
“We’ll have to wait and watch – a lot is going on right now, and it’s extremely tough to anticipate, especially considering the situation in Ukraine, which is a very fast-moving story that affects gas prices.
“Gas prices have decreased significantly on the wholesale market for a variety of reasons, including this one.
Despite this, both the UK and the international outlook are significantly brighter than they were a few weeks ago.
So keep your fingers crossed on this front.
He continued, “However, this autumn and winter will continue to be difficult for many homes, though perhaps not as difficult as many had feared.”
“The fact that inflation isn’t necessarily exceeding expectations this time around – in fact, it’s a little bit below forecasts – will provide some reassurance during a difficult economic period,” the author writes.
There is a limit to how long a company can continue to withstand these escalating costs.
Alex Veitch, head of policy and public relations at the British Chambers of Commerce, stated that the inflation rate demonstrates the “persistent pressure” on firms and consumers.
Adding that producer price inflation remains at a record high of 20.5%, he stated, “There is a limit to how long a company can absorb these escalating expenses until something must give.” According to our analysis, two-thirds of businesses intend to raise their rates.
“When implemented, the magnitude of last week’s government intervention on energy prices should have a moderating effect on inflation.
Due to the lack of information regarding how much assistance each business will receive and for how long, few are planning to invest soon.
