Inflation rises to 10.1% as economy reels from mini-budget chaos | Business News
The rate of inflation rose to 10.1% in September, according to official figures, as the economy reels from the effects of rising prices and the fallout from the mini-budget.
The Office for National Statistics (ONS) said the consumer prices index (CPI) measure rose from an annual rate of 9.9% in August to match the recent 40-year high seen in July.
The report showed the largest upwards contribution came from food costs, while fuel provided the greatest downside pressure.
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The data was released against a backdrop of turmoil – partly a result of the effects caused by Russia’s war in Ukraine and the Western sanctions imposed in response.
Households and businesses are also facing greater uncertainty ahead after the mini-budget tax and spending giveaway of 23 September was largely overturned following a violent rejection by financial markets.
There are now just 12 days left for new Chancellor Jeremy Hunt to find ways to gain economic confidence – and a plug for Britain’s funding gap – before the 31 October “medium-term fiscal plan” and analysis of the situation from the Office for Budget Responsibility (OBR).
Benefits and pensions implications
The lack of clarity on the government’s spending plans leaves millions of pensioners and benefit claimants in limbo.
That is because September’s inflation figure has implications for how their payments are uprated.
If the government decides to raise benefits by inflation, the hike will come into effect from next April.
September’s figure is also used for reviewing the triple-lock pension commitment.
The triple-lock means pensions will rise by either average earnings, CPI inflation based on September’s rate, or 2.5% – whichever is highest.
With average earnings most recently hitting 5.4%, the triple lock should ensure pensions rising by the inflation rate in April next year.
However, on Tuesday, Downing Street indicated ministers could ditch their commitment to the triple lock as Mr Hunt finds ways to claw back funds.