UK inflation returns above 10 percent

By Al Mayadeen English
Source: Agencies
19 Oct 14:30
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Food price increases took British inflation back to above 10% in September.

People pass the Bank of England, which could hike its rate by as much as one percentage point to 3.25% at its next meeting in November. (AP)

Official figures indicated Wednesday that British inflation rose back beyond 10% in September, owing to increasing food costs in a country plagued by a cost-of-living crisis.

The Consumer Prices Index increased to 10.1% on an annual basis, up from 9.9% in August, according to the Office for National Statistics.

The September rate matched the July level and is the highest in 40 years, owing to sky-high energy bills. "I understand that families across the country are struggling with rising prices and higher energy bills," Britain's new Finance Minister Jeremy Hunt said in a separate statement.

"This government will prioritize help for the most vulnerable while delivering wider economic stability and driving long-term growth that will help everyone."

Market turmoil has rattled the government in the aftermath of a budget that promised unfunded tax cuts. The majority of the measures were later repealed, leaving Prime Minister Liz Truss fighting for her job.

Widespread criticism over the budget was followed by Truss sacking Hunt's predecessor, Kwasi Kwarteng, after less than six weeks in the role.

Analysts believe Wednesday's report will put pressure on the Bank of England to continue raising its key interest rate by significant amounts. According to Capital Economics, the Bank of England could raise interest rates by up to one percentage point to 3.25 percent at its next meeting in November.

Liz Truss under English fire

Britain's new Finance Minister, Jeremy Hunt, warned on October 15 of looming tax hikes as he admitted to "mistakes" made in a disastrous budget that still threatens to bring down Prime Minister Liz Truss.

The day before, the Prime Minister dismissed Kwasi Kwarteng as Finance Minister following the government's massive tax cuts that ignited financial market turmoil.

The Times, Telegraph, and other newspapers reported that senior Conservative members of parliament were still plotting to unseat Truss, possibly within days, dismayed at the party's collapse in opinion polls since she replaced Boris Johnson on September 6.

New Chancellor Jeremy Hunt indicated he would be tearing up the strategy that brought Truss to 10 Downing Street.

"There were mistakes," acknowledged Hunt, a former foreign secretary who is seen as a Tory centrist. He said Kwarteng and Truss had erred in trying to cut taxes for the highest earners and in presenting their budget without independent forecasts from the Office for Budget Responsibility.

"The prime minister recognized that, that's why I'm here," Hunt told Sky News.