UK inflation surges to 5.2% in September

| October 18, 2011

The Office for National Statistics (ONS) today announced Consumer Price Inflation (CPI) accelerated to annual rate of 5.2% last month from August’s rate of 4.5%.

The rate represented the highest since September 2008 and it has never exceeded this rate since the CPI measure was first calculated in 1997.

Higher inflation continues to be led by rising energy costs.

The ONS said in a statement: “By far the largest upward pressure to the change in CPI… came from increases in gas and electricity charges.

“There were also large upward pressures from air transport and communication services,” it added.

UK inflation continues to remain more than double the target of 2% and has been above this level since December 2009 and is expected to remain above target during 2012.

The Bank of England previously warned that inflation could reach 5% by the end of the year, driven higher by rising energy and food costs but should return to target by 2013.

Many economists agree with the central bank’s opinion that inflation will soon start to decline but much will depend on oil price developments, according to one analyst.

Gas and electricity bills have jumped almost 10% in the past month, and are up 18.3% on the year.

The rise in CPI is used to measure April’s rise in the basic state pension, which will mean the weekly pension will increase by £5.31 a week to £107.46.

Meanwhile, Retail Price Inflation (RPI), which includes mortgage costs and is used as the basis for many wage deals, rose to 5.6% in September from 5.2% in July.

This was the highest annual rate since June 1991.

Inflationary pressures are rife throughout the world, particularly in Asia, and many central banks have opted to lift interest rates to combat stubbornly high inflation.

However, the Bank of England earlier this month opted to keep rates at the historic low of 0.5%, suggesting it is reluctant at this stage to lift interest rates as it could be harmful to the economic recovery.

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