Latest data released by the Office for National Statistics (ONS) today show that inflation reached a record level in September.
The rate of Consumer Prices Index (CPI) inflation rose to 5.2% last month and matched its record high recorded in September 2008. It has also never been higher since the CPI measure was introduced in 1997.
Figures for the Retail Price Index (RPI) also rose from 5.2% to 5.6%. RPI includes mortgage interest payments and 5.6% represents the highest annual rate since June 1991.
Energy price hikes driving inflation
The cost of expenditure on gas, electricity and other fuels rose 18.3% on the year in September, while transport costs were up 12.8%. Food prices were 6% higher than last year.
There may be some good news for those receiving various types of benefits. September’s CPI is key because it will be used to set the amount by which the state pension and Jobseekers’ Allowance will rise next April.
Other rates set by the September inflation figures include allowances and indexation for income tax, national insurance, inheritance tax, capital gains tax, disability and maternity benefits, income support and tax credits.
Need for clearer pricing
Which? executive director, Richard Lloyd, says: ‘Food and energy prices continue to rise above the rate of overall inflation, putting household budgets under ever-increasing pressure. It doesn’t help when supermarkets promote ‘special offers’ that aren’t so special, and energy suppliers’ tariffs are so confusing even the companies themselves can’t work out which are the cheapest.
‘Energy companies and supermarkets must make pricing clear and fair to help consumers make ends meet.’
Paul Davies, savings analyst at Which?, added: ‘The latest inflation figures are more bad news for savers. For those of you looking to beat inflation you’ll need to earn 6.5% to match CPI if you’re a standard rate taxpayer of 20%.
‘If you are a higher-rate 40% taxpayer, you’ll need to be earning 8.7% on your savings. These rates are much higher than the top end of the current savings Best Rate tables.’