Inflation is expected to increase to its highest level for 21 months as more pressure piles on the Chancellor and the Bank of England.<\/p>\n
Economists have predicted that Consumer Prices Index (CPI) inflation will have hit 4% in September, when the Office for National Statistics (ONS) reveals its latest data on Wednesday.<\/p>\n
It would mark the highest level since January 2024.<\/p>\n
Inflation struck 3.8% in July and August amid pressure from rising food prices, as firms highlighted increased tax and labour costs.<\/p>\n
Economists at Pantheon Macroeconomics predicted that higher motor fuel and air fare prices would help drive inflation to 4% in September.<\/p>\n
It also pointed towards \u201cstrong clothes prices\u201d for the month, but indicated this could be offset by \u201cslightly softer\u201d services price inflation.<\/p>\n
Economists have also suggested there could be a contribution from increased private school fees.<\/p>\n
Some schools were expected to increase fees from the start of the new school year as they staggered higher costs for parents after the Government introduced a 20% VAT rate for private school fees at the start of the year.<\/p>\n
September\u2019s predicted jump in inflation could represent a peak in the rising cost of living for UK households.<\/p>\n
The Bank of England previously forecast that inflation would peak at around 4% in September before steadily falling.<\/p>\n
Pantheon Macroeconomics\u2019 Rob Wood has said he expects inflation to \u201cslow only slightly\u201d in the following months, dipping to 3.8% by the end of the year.<\/p>\n
Other economists have been more optimistic, with Investec suggesting it expects the rate to have peaked at 3.9% in September before falling.<\/p>\n
Any increase would still highlight a challenging economic backdrop for the Bank of England as it seeks to bring inflation down to its 2% target rate.<\/p>\n
On Friday, the Bank\u2019s top economist Huw Pill urged other rate-setters to be \u201cmore cautious\u201d about future cuts due to concerns that inflation could stay stubbornly high.<\/p>\n
Another rise in inflation could also be a major concern for Chancellor Rachel Reeves, a month ahead of her autumn Budget.<\/p>\n
The September inflation rate is typically used to decide the level of increase for many benefits, such as universal credit, tax credits and disability benefits.<\/p>\n
This rate is also a key part of the Pension Triple Lock, which is used to decide how much pensions will increase by in the following April.<\/p>\n
However, the increase is based on either this inflation rate, average earnings growth between May and July, or 2.5%.<\/p>\n
Given earnings growth was confirmed as 4.8%, the inflation rate will only be used if there is a shock acceleration beyond this level.<\/p>\n","protected":false},"excerpt":{"rendered":"Inflation is expected to increase to its highest level for 21 months as more pressure piles on the…\n","protected":false},"author":3,"featured_media":316522,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[64,79,83259,159062,159061,159060,72333,67,132,68],"class_list":{"0":"post-316521","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-office-for-national-statistics","11":"tag-pantheon-macroeconomics","12":"tag-price-inflation","13":"tag-private-school-fees","14":"tag-the-bank-of-england","15":"tag-united-states","16":"tag-unitedstates","17":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115402079129702280","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/316521","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=316521"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/316521\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/316522"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=316521"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=316521"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=316521"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}