The Consumer Price Index has risen to 10.1% in the 12 months to September 2022, returning to the July level, after a small drop to 9.9% in August.
Prices are now rising at their fastest rate since the early 1980s.
This month’s increase in inflation is being driven by a continuing rise in food and non alcoholic drinks prices, with this section of the price index having risen 14.5% in the last year.
The latest figures are particularly notable because it is the September inflation figure that traditionally dictates the annual rise in the state pension for the following April.
The Conservative party manifesto contained a commitment to maintain the so called ‘tripple lock’ on increasing the state pension with the higher of either earnings or inflation.
However, with the new Chancellor Jeremy Hunt seeking to curb public spending in order to reduce government borrowing, the prime minister’s official spokesman yesterday refused to guarantee that pensions would this year rise with inflation.
The think tank, the Resolution Foundation has suggested that only raising pensions in line with earnings, rather than the Consumer Price Index, has the potential to save the public finances some £6 billion a year.
However any failure to raise pensions in line with inflation is likely to prove politically problematic for the government.
A number of Conservative MPs such as Stephen Crabb, Maria Caulfield, and Steve Double have already publicly suggested that they would not support any move. With the potential for a parliamentary revolt amongst Conservative MPs, it is therefore far from evident that the government would be able to pass such a measure through the House of Commons.
The latest rise in inflation also puts pressure on the government to commit to raising Universal Credit in line with inflation.
Writing on Twitter this morning, the Green MP Caroline Lucas, highlighted how her local Citizen’s Advice Bureau in Brighton has seen a 280% increase in people in financial distress since July, saying ‘Hunt can and must increase benefits with inflation. Refusal to do so will cost lives”.
The Bank of England has previously said that it expects UK inflation to peak at 11% in October, before remaining around that level in the last quarter of the year, and then falling back through 2023.
The UK is not the only country experiencing high inflation. Inflation in Germany is currently also at the 10% mark, with the figure at 9% in Ireland, 8.5% in America, and 6% in France.
Twelve months ago, in September 2021, UK inflation was only 2.9%.