FAMILIES will be left worse off as inflation soars to its highest in nearly a decade.Inflation in October hit 4.2% according to figures from the Office For National Statistics, up from 3.1% a month earlier.
1Prices of goods are rising driven by energy costsCredit: Alamy
Inflation is a measure of the cost of living. It looks at how much the price of goods has changed over time.
The average increase in prices is usually based on how much things cost today compared to a year ago and is known as the inflation rate.
The latest figures show inflation surged to nearly its highest since December 2011, pushed up by rising energy and fuel costs.
Shadow Chancellor Rachel Reeve said it will leave households more than £1,000 worse off – or £20 a week over a year.
She said: “Inflation rising to more than double the target and the highest since 2011 are extremely concerning giving the growing cost of living crisis.”
The Government sets an inflation target of 2% to keep the economy growing steadily.
The Bank of England (BoE) has warned that inflation could hit 5% and it is expected to raise interest rates as a result.
Earlier this month the central bank decided to hold rates for now, despite rising speculation that it would increase interest rates.
There could be a rise before Christmas though, as the BoE’s next decision on interest rates will be December 16.
Typically a rate rise can help reduce inflation because it stops people spending and borrowing as much.
Sir John Gieve, former deputy governor of the Bank of England, said on the BBC’s Today programme on Radio Four: “It’s a little bit higher than the bank and most forecasters were expecting.
“The key point is that it’s not thought to be a one-off.
“The bank and other forecasters expect it to rise right the way through to April to around 5% and then to stay well above target for the rest of the year.”
Commenting on the figures, Chancellor Rishi Sunak said: “Many countries are experiencing higher inflation as we recover from Covid and we know people are facing pressures with the cost of living, which is why we are taking action worth more than £4.2 billion to help them.” …