UK inflation surged to its highest rate in six months, reaching 2.3% for the year to October, up from 1.7% in September. The increase was primarily driven by higher energy bills, which saw a rise of about £149 for a typical household last month. Despite this uptick, inflation is still significantly lower than the peak of 11.1% in October 2022.
Energy costs, particularly for gas and electricity, contributed the most to the inflationary jump. Although the rise in energy prices has slowed compared to previous years, it remains a key concern for households, especially with temperatures dropping to freezing levels this week. As of now, the average annual cost for a typical household under the energy price cap stands at £1,717, still lower than last winter.
The UK government has introduced measures to ease the financial burden, such as the £300 winter fuel payment, though this has been means-tested for all but the poorest pensioners. Charities have voiced concerns that less well-off households may struggle with the increasing cost of living, particularly as government support for energy bills has been scaled back.
In addition to energy costs, inflation was also impacted by increases in food prices, particularly for staples like cheddar cheese, butter, and baking potatoes. However, other sectors, including live music, theatre, and services such as haircuts and hotels, saw price decreases that partially offset the overall inflation rise.
With inflation continuing to exert pressure on households, concerns remain over how much more the cost of living could rise, especially with potential tax hikes and the looming threat of trade tariffs under the new U.S. administration. While interest rates were recently cut to 4.75%, experts anticipate fewer rate cuts in the near future, with the Bank of England adopting a “gradual” approach to monetary policy.
Despite these challenges, the government remains optimistic about the economic outlook, with some experts noting that inflation at 2.3% is still relatively low, though households are still feeling the effects of price increases over the last few years.