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Inflation set to return to double-figures as food prices surge

The Office for National Statistics (ONS) will reveal the latest increase in the cost of living for UK households on Wednesday morning.

18 October 2022

Inflation is expected to have returned to double-figures in September due to rising food prices, according to economists.

The Office for National Statistics (ONS) will reveal the latest increase in the cost of living for UK households on Wednesday morning.

Economists have predicted that it will show Consumer Price Index (CPI) inflation increased to 10% in September, compared with 9.9% the previous month.

There is likely to be an increase despite falls in petrol prices, which dropped by around 4% over the month according to Forex.com, and used car prices.

Experts at Pantheon Macroeconomics have said this is expected to have been offset by “further increase in food CPI inflation and services”.

Food inflation is predicted to have jumped to 14.3% from 13.1% in August.

September’s inflation reading will make important reading for the Treasury as it used to decide increases for a number of key policies.

For example, the CPI rate will be used as part of the Work and Pensions Secretary’s annual benefits uprating review.

If the Government decides to uprate benefits by inflation, this is the percentage they will be increased by, this will come into effect from next April.

September’s inflation figure is also the one used by the department within the triple-lock pension commitment.

The triple-lock means pensions will rise by the highest of three figures: average earnings, CPI inflation based on September’s rate or 2.5%.

With average earnings most recently hitting 5.4%, it is widely expected that pensions would rise by the inflation rate in April next year.

However, on Tuesday, Downing Street indicated ministers could ditch their commitment to the triple lock as new Chancellor Jeremy Hunt looks for more cuts to fill the Government’s financial black hole.

The inflation rate will also be used to decide the property tax increase facing high street firms.

Business rates for firms will increase by almost £2.7 billion England from April without Government intervention, if inflation hits the predicted 10% figure.

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