CONSUMER prices increased at a record rate in the year to September, the Office for National Statistics (ONS) said yesterday.
The consumer price index (CPI) rose to 5.2 per cent – the highest since it was introduced in 1996, and equal to the peak in September 2008.
The figure was 4.5 per cent in the year to August, making this the second largest monthly jump in the rate ever.
Inflation was last within its target of two per cent, plus or minus one per cent, in December 2009.
The cost of living, measured by the retail price index (RPI), rose by 5.6 per cent, up from 5.2 per cent in August and the highest annual since 1991.
The tax and price index (TPI), which also takes taxation into account, rose by 5.3 per cent -- up from 4.8 per cent in the previous month.
Meanwhile average weekly wages failed to keep pace, rising by just 1.5 per cent in the year to August in the private sector and 2.2 per cent in the public sector. Energy prices accounted for 67 per cent of the increase in CPI from August to September. Gas and electricity prices soared by 18.3 per cent in the 12 months to September.
In a speech last night Bank of England governor Mervyn King (pictured left, with chancellor George Osborne) restated his view that domestic demand remains low and “temporary” factors have pushed up inflation.
When last January’s VAT rise drops out of the index this January, all other things being equal, inflation will fall by 0.76 percentage points, and commodities prices appear to have slowed.
Furthermore, food prices, which account for 10 per cent of the CPI, may fall soon as supermarkets have announced a price war.
However, falls in inflation remain uncertain – core inflation increased by 3.3 per cent in the year to September, up on 3.1 per cent in August, largely driven by air fares.