Inflation in September remained at a stubborn 6.7%, posing challenges for the government’s goal of halving it this year. This figure has significant implications as it influences benefit payments and tax levels for the following year. The unexpected inflation is largely attributed to soaring fuel prices.
However, there is hope for a significant drop in October’s inflation due to shifts in energy price caps. This September figure is crucial for calculating benefit payment increases in April, as well as some tax adjustments.
The Office for National Statistics (ONS) reported that the main factor contributing to the slight easing of inflation was the decline in food and non-alcoholic drink prices. This marked the first monthly decrease since September 2021.
The rise in energy and commodity costs following Russia’s invasion of Ukraine had strained family budgets. Lower wholesale costs are now impacting retail prices, but global oil prices remain under pressure due to production cuts by major oil-producing nations.
The wider ONS data indicated a slowdown in core inflation, which excludes volatile elements like energy and food costs. This, combined with reduced wage growth, offers hope that the Bank of England might postpone an interest rate hike in the coming month.
Chancellor Jeremy Hunt emphasized the importance of adhering to the plan to ease the economic pressure on families and businesses amid the ongoing inflation challenge.
