Inflation has been a serious issue for some time now, but that issue just passed beyond serious. Well beyond.
The leap to 4.2% in prices in October, from ‘just’ 3.1% in September, is nothing short of staggering and a huge red alert to households around the UK.
The cost of living squeeze has tightened significantly just as we enter a tough winter and will, without a shadow of a doubt, put added pressure on the Bank of England to raise interest rates in December.
To make matters worse, there are many structural issues in the economy that could drive inflation higher still in the months ahead, specifically the toxic mix of surging demand as we exit the pandemic and cross-sectoral supply chain problems.
For savers and the risk-averse, this latest inflation spike is the savings equivalent of an extinction event.
Reflecting on the data, Grant Fitzner, chief economist at the ONS, said: “Inflation rose steeply in October to its highest rate in nearly a decade.
“This was driven by increased household energy bills due to the price cap hike, a rise in the cost of second-hand cars and fuel as well as higher prices in restaurants and hotels.
“Costs of goods produced by factories and the price of raw materials have also risen substantially and are now at their highest rates for at least 10 years.”
For households, savers and anyone already struggling with the cost of living and the aftermath of the pandemic, today’s inflation data is nothing short of brutal.
It’s batten down the hatches time for households the length and breadth of the UK.