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Daily Mirror
Daily Mirror
Emma Munbodh

Inflation hits highest in nearly a decade at 4.2% as car prices and energy bills soar

The cost of living increased to 4.2% in October from 3.1% in September, the Office for National Statistics has said.

The figure is more than double the Bank of England's target rate of 2%, and is based on the consumer Prices Index (CPI) measure of inflation.

The Office for National Statistics (ONS) said the rise was driven by rocketing energy bills after a 250% leap in wholesale costs.

Second-hand cars and the cost of eating out also accounted for the steep rise.

It comes after the Chancellor watered down the state pension by scrapping the triple lock next year - meaning millions of Britain's elderly people will get a rise of just 3.2% next April.

Meanwhile NHS workers will get just 3% - well below the cost of living.

The government is reviewing the price cap - warning energy bills could surge to even higher levels next year (Getty Images/iStockphoto)

Grant Fitzner, chief economist at the ONS, said: "Inflation rose steeply in October to its highest rate in nearly a decade.

"This was driven by increased household energy bills due to the price cap hike, a rise in the cost of second-hand cars and fuel as well as higher prices in restaurants and hotels.

"Costs of goods produced by factories and the price of raw materials have also risen substantially and are now at their highest rates for at least 10 years."

Last week the Bank of England made the decision to hold interest rates at record lows despite warnings the cost of living was spiralling out of control.

But the Bank said a rate increase was on the way as it warned gas and electricity tariff increases will see CPI leap to around 5% next April.

Is the cost of living out of control? Let us know your thoughts in the comments below

Shadow Chancellor of the Exchequer Rachel Reeves said: “Inflation rising to more than double the target and the highest since 2011 are extremely concerning giving the growing cost of living crisis.

“It's going to leaves households more than £1,000 worse off.

“From the energy price cap going up, increased VAT for hospitality businesses, used car and clothing costing more, fuel prices hitting another record high and rents rising at their fastest rate in 13 years - the list of price crunches linked to this inflation rise goes on and on.

“Instead of taking action, the government are looking the other way, blaming 'global problems' while they trap us in a high tax, low growth cycle. “

The increase to the CPI rate is also likely to wipe out any increases to wages.

The National Institute of Economic and Social Research yesterday warned a rate this high would mean “close to zero average real earnings growth next year”.

A Tory Cabinet minister today failed to guarantee the public sector pay rise next Spring would keep up with 4.2%.

Anne-Marie Trevelyan was asked twice by Sky News if millions of workers would get at least 4% just to stand still.

Both times she stopped short of a guarantee, instead saying the decision was for individual pay bodies and departments.

She said Chancellor Rishi Sunak has already accounted for a rise. He suggested CPI would average 4% over the year from October.

She said: “The Chancellor spoke about this in his Budget, and the figures looking forward identified there would be a slight increase in inflation in the months ahead because of the number of pressures that have come through as economies have all kicked off again post-Covid.

“He noted at the time that departments’ settlements would be there so they could… have those conversations with their workforces.

“And I’m sure that will happen in the months ahead and the independent review bodies will be able to work with their departmental teams to put forward the right proposition.”

Asked again if it must be at least 4% she replied: “Indeed that’s what the pay review bodies are there for, to work with their own cohort of public sector workers and work with the departmental teams to get that right, so I’m sure we’ll see that coming through in the months ahead.”

What is inflation and why is it so important?

Inflation tracks the changing monthly cost of a ‘basket’ of goods and services, such as food, clothing and fuel.

To make the sums easy, this basket is limited and tweaked according to consumer trends.

It is a broad, useful way to monitor how much it costs to buy things.

But if the cost of inflation goes up, it means consumers pay more on average.

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