December 1, 2021

Inflation: UK prices soar at fastest rate for almost ten years

The cost of living has surged at its fastest pace in almost 10 years, hitting 4.2% in the year to October.

It is mainly due to higher fuel and energy prices but the cost of second-hand cars and eating out also rose, the Office for National Statistics said. Inflation is up sharply since Covid restrictions ended this year and the economy reopened. The Bank of England says it may have to raise interest rates in the “coming months” to tackle rising prices. October’s reading is far higher than the 3.1% rise recorded in the year to September and more than double the Bank’s target of 2%.

What is inflation?
Inflation is the rate at which prices are rising – if the cost of a £1 jar of jam rises by 5p, then jam inflation is 5%. It applies to services too, like having your nails done or getting your car cleaned. You may not notice low levels of inflation from month to month, but in the long term, these price rises can have a big impact on how much you can buy with your money – sometimes referred to as the cost of living.

Household energy bills were the biggest driver of inflation after Ofgem, the energy regulator, lifted the price cap on domestic gas and electricity last month. It meant that gas bills rose by 28.1% in the year to October, while electricity climbed by 18.8%. Petrol prices also rose by 25.4p to 138.6p per litre amid a surge in global oil prices. That’s the highest price since September 2012. Used car prices also rose by 27.4% since April this year, due to a global microchip shortage which has slowed the production of new vehicles.

Hotel stays, transport, clothing, household goods and raw materials also became more expensive.