Official statistics show the UK headline
rate of inflation now stands at a 10-year
high, with surveys pointing to further
upward pressure as firms continue to
report rapidly-rising cost burdens.
Data released last month by the
Office for National Statistics (ONS)
revealed that the Consumer Prices Index
(CPI) 12-month rate – which compares
prices in the current month with the
same period a year earlier – rose to 4.2%
in October. This was above all predictions
in a Reuters poll of economists and
represents a considerable jump from
September’s rate of 3.1%.
The rise was largely driven by higher
household energy bills following the
lifting of the regulatory price cap on 1
October, with gas prices paid by consumers
up 28.1% and electricity up 18.8%
in the year to October. ONS said price
rises were evident across the board with
the cost of petrol, second-hand cars, furniture
and household goods, hotel stays
and eating out all increasing noticeably.
Some of the current increase in the
rate of inflation is inevitably due to weak
price levels witnessed in October last
year when the pandemic was dragging
down economic activity. Analysts do
expect to see inflation ease somewhat
next year as these factors begin to drop
out of the data.
Survey evidence, though, suggests
there are further inflationary pressures
in the pipeline. Preliminary data from
November’s IHS Markit/CIPS Composite
Purchasing Managers’ Index, for
instance, revealed record cost pressures,
with input price inflation ‘rising at
the fastest rate since the index began
in 1998’, fuelled by ‘higher wages and a
spike in prices paid for fuel, energy and
raw materials.’
November’s Monthly Industrial Trends
Survey published by the Confederation
of British Industry (CBI) also highlighted
the current inflationary pressures; output
price expectations among manufacturers
climbed to the highest level since
May 1977.SFFS Economic Review_Nov 21