UK inflation reached 2.3% in October, its highest level in six months, driven by an increase in energy prices, official figures show. This rise marks a larger-than-expected jump from 1.7% in September.
The annual cost of gas and electricity for a typical household rose by approximately £149 last month. However, price increases are happening at a slower pace than in previous years. Despite this, inflation is now above the Bank of England’s 2% target. Interest rates were lowered for the second time this year to 4.75% two weeks ago, but economists predict no further cuts until 2025.
Higher inflation contributes to rising living costs, and may keep interest rates higher, making loans, mortgages, and credit cards more expensive, which could impact consumers’ spending power.
While inflation has fallen since its peak in October 2022, it doesn’t mean prices are dropping, only that they are rising more slowly.
With winter temperatures dropping and snow affecting parts of the UK, rising energy bills are expected to become a concern for many households. Although electricity and gas prices are lower than last winter, the increase comes as government support for energy bills has been reduced. Additionally, the government has announced that winter fuel payments will now be means-tested, discontinuing support for 10 million pensioners in England and Wales.
