Businesses have called on the Chancellor to provide a clear plan for investment and growth after the UK’s inflation rate rose to 11.1 per cent in October – a 41 year high.
The figure – mainly down to rising energy and food prices – has surprised many economists who expected the figure to rise from 10.1 per cent in September to around the 10.7 per cent mark.
The unexpectedly high figure now casts a real shadow over Chancellor Jeremy Hunt’s Autumn Statement on Thursday and could mean the Bank of England has to raise interest rates further in order to bring inflation down to its 2 per cent target.
Food price inflation rose to 16.5 per cent on an annual basis, the highest for 45 years, according to the Office for National Statistics (ONS) and more figures published by the ONS show that UK property prices rose by 9.5 per cent in September compared with the same month in 2021.
The British Chamber of Commerce’s Head of Research David Bharier said the rising trend in inflation was eroding away at business confidence and that a clear plan was needed to tackle the issue.
He said: “Today’s CPI index of 11.1 per cent shows that far from peaking, inflation continues to rise. At 19.2 per cent, Producer Price Inflation (PPI) remains way above historical levels.
“We speak to thousands of businesses who tell us this is unsustainable. Our research shows that confidence is falling fast as many SMEs find it almost impossible to absorb or pass on rising costs.
“While the Bank of England seeks to control inflation through further interest rate rises, this is a blunt instrument that fails to address the core drivers of inflation for most firms: soaring energy costs, global supply chain disruption, and rising staff costs due to labour shortages.
“Ahead of tomorrow’s Autumn Statement, businesses will need to see a clear plan from the Chancellor to boost business investment and growth, as well as targeted measures that ease the specific causes of inflation. The UK economy otherwise faces a lethal combination of recession and runaway inflation.”
Earlier, during a press conference from the G20 summit in Bali, Prime Minister Rishi Sunak blamed the ongoing conflict in Ukraine for the worldwide rise of inflation.
He said: it is part of the “cruel and unrelenting reality of Putin’s war” leaving people around the world “hit by punishing price rises and facing an uncertain future”.
ONS chief economist, Grant Fitzner, said: “Rising gas and electricity prices drove headline inflation to its highest level for over 40 years despite the energy price guarantee. Over the past year, gas prices have climbed nearly 130 per cent while electricity has risen by about 66 per cent.
“Increases across a range of food items also pushed up inflation. These were partially offset by motor fuels, where average petrol prices fell on the month, while the price for diesel rose taking the disparity in price between the two fuels to the highest on record.”
The British Chamber of Commerce’s Head of Research David Bharier said the rising trend in inflation was eroding away at business confidence and that a clear plan was needed to tackle the issue.
He said: “Today’s CPI index of 11.1 per cent shows that far from peaking, inflation continues to rise. At 19.2 per cent, Producer Price Inflation (PPI) remains way above historical levels.
“We speak to thousands of businesses who tell us this is unsustainable. Our research shows that confidence is falling fast as many SMEs find it almost impossible to absorb or pass on rising costs.
“While the Bank of England seeks to control inflation through further interest rate rises, this is a blunt instrument that fails to address the core drivers of inflation for most firms: soaring energy costs, global supply chain disruption, and rising staff costs due to labour shortages.
“Ahead of tomorrow’s Autumn Statement, businesses will need to see a clear plan from the Chancellor to boost business investment and growth, as well as targeted measures that ease the specific causes of inflation. The UK economy otherwise faces a lethal combination of recession and runaway inflation.”
