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The inflation rate in the UK held steady at 3.8% in September, a figure lower than expectations, according to official figures. The Office for National Statistics (ONS) reported that prices for groceries also saw their slowest rate of increase in over a year. Grant Fitzner, chief economist at the ONS, highlighted that the cost of food and non-alcoholic drinks actually decreased for the first time since May last year.
Both Chancellor Rachel Reeves and shadow chancellor Mel Stride expressed concerns over the inflation numbers. Reeves mentioned that she was generally dissatisfied with the figures, while Stride commented on how the rising inflation was impacting the cost of living for individuals. The Bank of England’s 2% target continues to be higher than the actual inflation rate of 3.8% in September, a figure that has remained consistent with the months of July and August.
In terms of factors contributing to the inflation rate, Mr. Fitzner noted that petrol prices and airfares were the main drivers of the increase, although prices for recreational and cultural purchases, such as live events, saw a decline. The inflation rate for food and non-alcoholic drinks dropped from 5.1% in the year to August to 4.5% in the year to September, a subtle change that may not be readily apparent to consumers in supermarkets.
Moving forward, there is speculation about the trajectory of food price inflation, with experts predicting a potential peak in inflation. Both Reeves and Stride have highlighted the impact of inflation on individuals, with Reeves emphasizing the need to support those facing higher bills and cost of living challenges. Stride criticized government policies such as national insurance increases and excessive borrowing as contributors to the inflation rate currently being nearly double the Bank of England’s target. The overall inflation figure for September is significant as it typically serves as the basis for benefits uprating in April, potentially leading to a 3.8% increase in benefit payments for millions of individuals next year
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