Sixteen year high for inflation in UK

According to recently released figures the level of inflation in the UK has now reached a sixteen year high, with inflation for September registering at 5.2%. The high cost of food, oil, and energy has been blamed for pushing inflation levels up to such a high figure, and the level of inflation is now way more than the 2% target set by the government. Inflation has been soaring for some months, and as a result of this the Bank of England has been unable to cut the base rate as quickly as had been expected at the start of the year, although it did apply a surprise 0.5% cut recently.

Industry officials, however, are optimistic that inflation levels have now reached their peak, and will start to come down over the coming months, which will enable the Bank of England to consider cutting interest rates more quickly in order to boost the economy.

One economist stated: “CPI was once again rather worse than expected in September, but this will be the peak in inflation. The key issue now is just how far and fast it will drop back as the food and energy effects which have pushed it up so sharply over the last year finally fade or go into reverse.”

Another official said that some consumers were managing to cut back on the cost of food and groceries, stating: “They’re doing more cooking and less ready-prepared food, they’re shopping around more, and indeed for the savvy shopper - and I’m thinking here particularly of non-foods - there are a lot of bargains to be had as price deflation and fierce competition between stores means there’s more promotions, more discounts and more deals that I’ve ever seen before.”

However, he added: “The bad news is extraordinary increases in gas and electricity prices are wiping out these gains, pushing overall inflation higher and hurting hard-pressed families and retailers of all sizes.”