Inflation climbed to 3.5% in September, the Office for National Statistics has said, according to the Daily Business. That is above the 3.4% that economists had predicted and up from 3.1% in August.
The rise was driven partly by fuel costs. Diesel has passed £2 a litre for the first time, while petrol now costs more than £1.70 a litre, with the conflict in the Middle East blamed for pushing prices up.
Key points
- Inflation — 3.5% in September, up from 3.1% in August and above forecasts.
- Fuel — diesel above £2 a litre, petrol above £1.70.
- Pension — wages grew 3.9%, so the state pension should rise to £250.70 a week.
- Rates — the Bank of England is expected to raise interest rates next month.
Wages grew by 3.9%, and under the triple lock that figure should set the rise in the state pension and many benefits. The pension would go up from £241.30 to £250.70 a week.
The Bank of England is expected to lift interest rates next month, with concern that inflation could pass 4% next year — double its 2% target. Martin Sartorius, lead economist at the CBI, said a rate hike “will remain firmly on the table” at the next meeting of the Monetary Policy Committee.
The figures also serve as a warning to Chancellor John Healey to keep spending tight in next week’s budget.
What it means in practice
For most households, the squeeze comes at the pump first, with diesel above £2 a litre feeding into the cost of deliveries and travel. The pension rise is worked out from wages, so it will not reach bank accounts until next year.
- Fuel bills — filling up costs more, and hauliers will pass on higher diesel prices to shops and customers.
- Pension — the 3.9% rise is due under the triple lock, but check the date it starts before budgeting.
- Mortgages — a rate rise next month could make borrowing dearer, so review any variable-rate deal now.
