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Inflation: Food bills see price rises return to 40-year high Inflation: Soaring bread and meat costs push price rises to 10.1%
(about 1 hour later)
The increase in the cost of living accelerated to 10.1% in September as living costs continued to hit household budgets. Soaring food prices have pushed the increase in the cost of living back up to the 40-year high seen in July.
Inflation - a measure of price rises - returned to the 40-year high it hit in July after food prices soared, official figures show. Inflation - a measure of prices - accelerated to 10.1% in September as rising living costs continued to hit household budgets.
It was above the expectations of economists, who had predicted a figure of 10%. Official figures show the biggest jump in food prices since 1980, with bread, cereals, meal and dairy prices all climbing.
The Bank of England has said inflation could peak at 11% this year.The Bank of England has said inflation could peak at 11% this year.
The Office for National Statistics (ONS) said Consumer Prices Index inflation had hit 10.1% in September, after seeing a slight dip to 9.9% in August. The Office for National Statistics (ONS) said Consumer Prices Index inflation had hit 10.1% in the 12 months to September, after seeing a slight dip to 9.9% in August.
The increase in the cost of living was driven by largely by energy bills and food prices. That was above the expectations of economists, who had predicted a figure of 10%.
The soaring price of bread, cereal, meat and dairy products pushed food prices higher in the year to September. The rise was driven largely by higher energy bills, food prices and transport costs.
Overall, the cost of food jumped by 14.5% compared with the same month last year, representing the largest annual rise for 40 years. Food and non-alcoholic drink prices also rose sharply, climbing by 14.5%, along with the cost of furniture and hotel stays.
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ONS director of economic statistics Darren Morgan said: "After last month's small fall, headline inflation returned to its high seen earlier in the summer.ONS director of economic statistics Darren Morgan said: "After last month's small fall, headline inflation returned to its high seen earlier in the summer.
"These rises were partially offset by continuing falls in the costs of petrol, with airline prices falling by more than usual for this time of year and second-hand car prices also rising less steeply than the large increases seen last year," he said. "These rises were partially offset by continuing falls in the costs of petrol, with airline prices falling by more than usual for this time of year and second-hand car prices also rising less steeply than the large increases seen last year."
"While still at a historically high rate, the costs facing businesses are beginning to rise more slowly, with crude oil prices actually falling in September." The latest official figures come as new Chancellor Jeremy Hunt attempts to tackle the rising cost of living, as well as the recent turmoil on financial markets sparked by his predecessor's mini-budget.
Over the last few weeks mortgage prices have hit a 14-year high, driving up costs for millions at a time when energy and food bills are also rising.
Mr Hunt said he understood that families were struggling, adding the government would "prioritise help for the most vulnerable while delivering wider economic stability".
'No let-up for families'
Experts said the latest inflation figures would put extra pressure on the Bank of England to hike interest rates at its next meeting in November.
By raising rates the Bank aims to encourage people to save more and spend less, in the hope this will stop prices rising as fast. It has increased rates seven times in a row since December as it tries to bring inflation back down to its 2% target.
However, higher rates also drive up borrowing costs for mortgage holders and businesses, with experts warning this could put a brake on economic growth.
Victoria Scholar, head of investment at Interactive Investor, said the Bank was "between a rock and a hard place" as price pressures continued to hit UK families.
"Inflation [is] still the most pressing economic problem facing the Bank of England as well as the government," she said.
"Without price stability, the cost-of-living crisis will continue to weigh on the economy by squeezing household budgets and dampening business margins," she said.
September's inflation figures are usually used to calculate next April's rise in the state pension and the increase in some benefits.September's inflation figures are usually used to calculate next April's rise in the state pension and the increase in some benefits.
It is unclear, however, if the government still intends to stick to this policy or cut down on its spending by increasing payments by a lower level by linking the rise to wages instead. It is unclear, however, if the government still intends to stick to this policy or cut its spending by increasing payments by a lower level by linking the rise to wages instead.