The cost of staples such as milk, cheese, and eggs is soaring at the quickest rate in the past 45 years.
The annual rate of food price inflation reached 16.2% in October, up from 14.5% in September, according to the most recent data.
Inflation has reached its highest level since 1981 due to the rapid increase in energy and fuel expenses.
The rising cost of living is straining household budgets, leaving many individuals in dire straits.
The Office for National Statistics (ONS) reported that it was affecting low-income households the most, as they spent around half of their income on food and energy, compared to about a third for those with middle-class earnings.
In October, the total inflation rate increased to 11.1%, the highest rate in 41 years, and an increase over September’s rate of 10.1%.
The latest numbers have been released ahead of Thursday’s Autumn Statement, in which Chancellor Jeremy Hunt is likely to announce public spending cuts and tax increases totaling billions of pounds.
Mr. Hunt stated that his proposals would try to rein in spiraling price increases, adding that he would take “tough but necessary decisions” to restore economic growth.
Rachel Reeves, Labour’s shadow chancellor, stated that the rising inflation rate would “strike more fear in the hearts of families across Britain” and was the result of “12 years of Tory economic failure.
To determine the rate of inflation, the Office for National Statistics (ONS) monitors the prices of a “basket of goods” containing hundreds of ordinary products.
According to the ONS, food prices rose significantly in October, with milk, pasta, margarine, eggs, and cereals all increasing.
Nevertheless, gas and electricity prices remained the primary contributors to inflation after bills increased once more last month.
The Energy Price Guarantee program did mitigate these increases, limiting the annual average household bill to approximately £2,500.
However, the ONS reported that gas and electricity prices were still nearly 130% and 66% higher than a year ago.
However, without government support, inflation would have risen to as high as 13.8%, according to the report.
Greg Pilley is the founder of the Gloucestershire-based Stroud Brewery & Taproom, which serves pubs and businesses with beer. He told that his company’s expenses have increased by 10%.
The price of electricity has risen in the past year, he claimed. “Our annual expenditures have increased to £70,000 from £30,000 the previous year, while the cost of raw materials has increased by between 10 and 15%.”
He stated that he had to raise his rates because he was paying significantly higher wages.
Mr. Pilley stated that the future is fairly uncertain. “We must sell three times as much beer to maintain our current position.”
Since last year, energy and food prices have increased due to the conflict in Ukraine and the impact of the Covid epidemic.
However, some experts believe October’s inflation rate of 11.1% may have been the pinnacle.
If the government continues to freeze [energy] prices in some fashion, according to Capital Economics’ chief UK economist Paul Dales, prices could begin to decline.
“There is a mounting indication that global factors are no longer exerting upward pressure on core inflation,” he continued.
In addition to energy costs and food prices, Dame Deanne Julius, a former member of the Bank of England’s Monetary Policy Committee, which determines interest rates, stated that some of the factors driving inflation were stabilizing.
If inflation declines, prices will rise at a slower rate, but not necessarily decrease.
To control inflation, the Bank of England has increased interest rates to 3%. It expects that by increasing the cost of borrowing money, individuals will spend less, demand will reduce, and the rate of price increases will slow.
However, rising interest rates are increasing the cost of mortgages and other loans.
The UK economy will likely enter a recession by the end of the year as a result of the impact on consumer spending.
The economy contracted by 0.2% between July and September, according to the most recent data, and the Bank of England has warned that the United Kingdom faces a challenging two-year recession.
A recession is defined as two consecutive three-month periods of economic contraction. It is a sign that the economy is operating poorly when corporations are frequently losing money and unemployment is rising.
Inflation is increasing in nations around the world. The rate in Germany is higher than in the United Kingdom, at 11.6%, while prices in the United States climbed by 7.7% in the year leading up to October.
However, the United Kingdom’s economic performance is lower than that of other large nations, and its economy is smaller than it was before the Covid epidemic.
October was always destined to be a particularly difficult month for inflation. Despite the Energy Price Guarantee, which capped annual bill increases at £2,500, inflation is at a 41-year high of 11.1%. Without the assistance program, it would have been closer to 13%.
Milk and cheese prices have driven food price inflation to its greatest level in 45 years. However, customers do not need to be reminded how widespread this phenomenon is.
Due to a mild winter, the full societal impact of these energy expenses has not yet been felt. This will make the coming months difficult.
Despite this, there are hints on the global markets that the post-pandemic supply chain issues that triggered the inflation spike a year ago are beginning to reverse course. The small loosening of China’s zero Covid lockdowns shows that there is light at the end of the tunnel.
This inflation rate should represent the maximum, but we have been here before.
The price of energy remains high, but much will depend on the remarks made by the chancellor tomorrow. As a result, inflation will remain very high for at least a few months, as it takes time for these global variables to manifest themselves in everyday pricing.
