Last Updated on November 17, 2022 by Bitfinsider
Reuters polled economists, who predicted a 10.7% annual increase in the consumer price index, and October’s reading surpasses September’s 40-year high of 10.1%.
Despite the government’s Energy Price Guarantee program, the Office for National Statistics said that electricity, gas, and other fuels contributed the most to price increases.
The ONS stated, “Indicative modelled consumer price inflation estimates show that the CPI rate would have last been higher in October 1981, when the estimate for the annual inflation rate was 11.2%.”
The CPI increased 2% on a monthly basis in October, reflecting the yearly CPI inflation rate between July 2020 and July 2021.
In the 12 months leading up to October 2022, the cost of housing and household services, which includes energy bills, reached an all-time high of 11.7%, up from 9.3% in September 2022.
The ONS reported that, on average, families are paying 88.9% more for electricity, gas, and other fuels in October 2022 than they were a year earlier.
Domestic gas prices have increased the most, with October 2022 prices more than doubling those of October 2021.
In the 12 months leading up to October, food and non-alcoholic beverages increased by 16.4%, marking the highest annual rate since September 1977.
According to the Bank of England, the UK is experiencing its longest recession on record, while the government and central bank work to coordinate the tightening of fiscal and monetary policies to curb inflation.
Mike Bell, global market strategist at JPMorgan Asset Management, described Wednesday’s data as “uncomfortable” in light of the Bank of England’s statement that just modestly higher interest rates will be required to return inflation to the 2% target level.
“We are not persuaded. Consistently underestimated have been the inflationary pressures caused by a tight labor market, according to Bell.
Although openings and employment softened slightly in yesterday’s data on the labor market, pay growth continued to rise. As headline inflation is anticipated to remain elevated for a few more months, workers may still request a raise to safeguard their disposable income.
JPMorgan predicts that U.K. interest rates will peak at 4.5%. Bell stated that the Bank of England will continue to raise rates until there is evidence that weakening economic activity is beginning to impact on wage demands.
Finance Minister Jeremy Hunt will make a new fiscal statement on Thursday and is likely to unveil significant “stealth” tax increases and spending cuts in an effort to repair a £50 billion-plus shortfall in the nation’s public finances.
It is anticipated that the government’s proposal will involve the freezing of different tax thresholds and exemptions, as Hunt attempts to capitalize on growing inflation to bolster the Treasury’s coffers.
Rachael Griffin, tax and financial planning expert at Quilter, stated, “Though anything is possible tomorrow, it would likely be a safe bet if the government chooses to rely on continued high levels of inflation as projected.”
“The decline in inflation observed in August appears to have been a fluke, and it is doubtful that inflation will fall in the near future.”
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