The jump in inflation was higher than expected and largely due to increases in the cost of energy.
Food was cited as another major element adding inflationary pressure during October, rising at the fastest annual pace since 1977.
In October 2022, the CPI annual inflation rate was the highest annual CPI inflation rate in the ONS’ National Statistic series, which began in January 1997. Indicative modelled consumer price inflation estimates suggest that the CPI rate would have last been higher in October 1981, where the estimate for the annual inflation rate was 11.2 per cent.
On a monthly basis, CPI rose by 2 per cent in October 2022, compared with a rise of 1.1 per cent in October 2021.
The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 9.6 per cent in the 12 months to October 2022, up from 8.8 per cent in September 2022. The annual inflation rate was last higher in the constructed historical estimates in December 1980, when it stood at 9.8 per cent.
A glimmer of hope amid the gloom
Ed Monk, associate director for Personal Investing at Fidelity International, says: “Inflation has once again exceeded the worst expectations and it will be little comfort to households that price rises would have been even worse than the 11.1 % recorded in October had it not been for the government’s giant intervention on energy prices.
“There were hopeful predictions that inflation could at last be peaking but you have to look very hard indeed for signs of optimism in today’s numbers.”
Kevin Brown, savings specialist at Scottish Friendly, noted that price hikes may start come down but this would be of little comfort in the short term.
He said: “It’s a bigger jump than was expected and it will raise fears that inflation has not yet reached its peak. However, there are still some early signs that price increases may soon begin to soften.
“Core inflation which excludes energy, food, tobacco and alcohol did not rise in October and remained flat at 5.8 per cent. This provides a small glimmer of hope that the cost of living crisis may start to fade slightly sooner than previously expected.
“Nonetheless, households are still vulnerable to fluctuating gas and electricity prices and rising mortgage and borrowing costs could offset any reduction families see in other areas next year.”
‘A rollercoaster ride for inflation next year’
Meanwhile, Simon Webb, managing director of capital markets and finance at LiveMore, notes that the UK is likely to lurch from an inflationary crisis into a recessionary one.
He said: “What appears to be a foregone conclusion, judging by the recent 0.2 per cent downturn in GDP, is that the UK is moving into recession along with other global economies. This should have the effect of bringing inflation down, however, there are still global shortages of food, with Russia’s invasion of Ukraine being a large contributory factor.
“What is notable about the CPI inflation figure is that it has been calculated using subsidised energy prices, so the 11.1 per cent rate is lower than if there was no energy price cap in place. This cap is due to be removed, or reviewed, in April 2023 but if it is taken away, inflation may well will pick up again. It could be a rollercoaster ride for inflation in the next year.”