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British inflation hits 40-year-high driven by food prices soaring 4.5%

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The new figure has driven investor expectations of further interest rate rises.

Soaring food prices have driven inflation in the UK to a new 40-year-high in September – the highest since early 1982. 

The consumer price index rose 10.1%, compared with 9.9% in August, according to the Office for National Statistics. 

That puts inflation back at the July peak, driven by food prices rising 14.5% on the levels a year earlier. 

Food prices rising

In a press release, the Office for National Statistics said, “Rising food prices made the largest upward contribution to the change in both the CPIH and CPI annual inflation rates between August and September 2022.

“The continued fall in the price of motor fuels made the largest, partially offsetting, downward contribution to the change in the rates.”

Chancellor Jeremy Hunt said in a statement, “This government will prioritise help for the most vulnerable while delivering wider economic stability and driving long-term growth that will help everyone.”

Interest rate rises coming?

The rise has increased investor expectations of further interest rate rises from the Bank of England. 

Earlier this week, Hunt reversed nearly all of the measures in Liz Truss and Kwasi Kwarteng’s disastrous mini-budget – leading to a surge in the value of the pound. 

Hunt said that a planned 1pm cut in income tax will be shelved “indefinitely” while reforms to off-payroll working rules will not be reversed, and the Government’s energy price guarantee will be re-assessed in April next year. 

Hunt said, “A central responsibility for any government is to do what’s necessary for economic stability. This is vital for businesses making long term investment decisions and for families concerned about their jobs, their mortgages and the cost of living.

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