UK Inflation Hits 40-Year High, Putting Squeeze on Households and Businesses
UK inflation hit a 40-year high of 11.1% in October, according to the Office for National Statistics (ONS). This was driven by rising food, energy, and housing costs.
The ONS said that the Consumer Price Index (CPI) rose by 1.1% between September and October, the biggest monthly increase since 1990.
The core CPI, which excludes food and energy prices, rose by 6.6% in October from a year ago, the highest level since 1992.
What does this mean for households and businesses?
The high level of inflation is squeezing household budgets and businesses. Households are having to spend more on essential items, such as food and energy, leaving them with less money to spend on other things. Businesses are also facing rising costs, which is putting pressure on their profits.
The high level of inflation is also leading to a decline in living standards. The ONS said that real wages, which take inflation into account, fell by 2.7% in the three months to August, the biggest decline since 2001.
What is the government doing to address the cost of living crisis?
The government has announced a number of measures to help households and businesses with the cost of living crisis. These include:
A £400 energy bill discount for all households
A £650 payment for low-income households
A £150 council tax rebate for most households
A one-off payment of £300 to pensioners
A one-off payment of £150 to people with disabilities
The government has also announced a number of measures to help businesses with the cost of living crisis. These include:
A cut in the basic rate of corporation tax from 19% to 17%
A temporary reduction in fuel duty
A new £1 billion investment fund to help businesses with the cost of energy
What the future holds
The outlook for the UK economy is uncertain. The high level of inflation is likely to continue to squeeze household budgets and businesses. The government’s measures to help with the cost of living crisis are likely to provide some relief, but they are unlikely to be enough to offset the full impact of inflation.
The Bank of England is expected to continue raising interest rates in an effort to bring inflation under control. However, this could lead to a slowdown in economic growth.
Unique insights
One of the most unique insights from the October inflation report is the fact that the core CPI, which excludes food and energy prices, continued to increase. This suggests that inflation is not just being caused by energy prices, but also by other factors such as strong demand and supply chain disruptions.
Another unique insight is the fact that the government’s measures to help with the cost of living crisis are largely one-off payments. This means that they are unlikely to provide long-term relief for households and businesses.
Conclusion
UK inflation hit a 40-year high in October, putting a squeeze on households and businesses. The government has announced a number of measures to help with the cost of living crisis, but these are unlikely to be enough to offset the full impact of inflation. The Bank of England is expected to continue raising interest rates in an effort to bring inflation under control, but this could lead to a slowdown in economic growth.