Soaring food prices drove UK inflation back into double digits in September, returning to the 40-year high reported earlier this summer.
The rate of Consumer Price Index inflation in the UK rose to 10.1 per cent in the 12 months through to September, official figures showed on Wednesday.
It was above the expectations of economists, who had predicted a figure of 10 per cent, compared with 9.9 per cent in the previous month.
The rate returned to July’s recent historic high, the Office for National Statistics figures showed.
The CPI monthly rate was 0.5 per cent in September, compared with 0.3 per cent in the same month last year.
The figures leave inflation well above the Bank of England’s 2 per cent target, adding to pressure on policymakers to lift the key rate significantly next month.
Retail Price Index inflation (RPI) increased to 12.6 per cent, while CPI including housing costs (CPIH) returned to 8.8 per cent in September from 8.6 per cent in August, the ONS said.
The danger is that prices could accelerate again early next year after the government loosens its support for household energy bills.
The pound dropped after the report, falling as much as 0.3 per cent on the day to $1.1286.
The ONS said rising food prices was the greatest addition to the cost-of-living squeeze on households, while it had been partially offset by a drop in motor fuel costs.
ONS director of economic statistics Darren Morgan said the rise in the cost of living was the fastest in 40 years. Before July, the last time it had exceeded 10 per cent was in February 1982 when it hit 10.2 per cent.
“After last month’s small fall, headline inflation returned to its high seen earlier in the summer,” Mr Morgan said.
“The rise was driven by further increases across food, which saw its largest annual rise in over 40 years, while hotel prices also increased after falling this time last year.
“These rises were partially offset by continuing falls in the costs of petrol, with airline prices falling by more than usual for this time of year and second-hand car prices also rising less steeply than the large increases seen last year.
“While still at a historically high rate, the costs facing businesses are beginning to rise more slowly, with crude oil prices actually falling in September.”
Karen Betts, chief executive of the Food and Drink Federation, said: “Food and drink manufacturers continue to do everything they can to keep product prices down, but huge rises in ingredient, raw material, energy and other costs mean they have no choice but to pass some price rises on.”
In response to the figures, Chancellor of the Exchequer Jeremy Hunt said the government “will prioritise help for the most vulnerable while delivering wider economic stability”.
“I understand that families across the country are struggling with rising prices and higher energy bills,” said Mr Hunt.
“This government will prioritise help for the most vulnerable while delivering wider economic stability and driving long-term growth that will help everyone.”
Since former chancellor Kwasi Kwarteng's mini-budget on September 23, the UK's economy has been in turmoil, with the pound crashing and markets volatile.
Last week, Prime Minister Liz Truss sacked Mr Kwarteng and replaced him with Mr Hunt, who proceeded to rip up her tax-cutting agenda.
Ms Truss is set to address MPs in parliament on Wednesday for the first time since abandoning her economic plan, as she seeks to reassert her waning authority.
The prime minister, who is battling to rescue her premiership after only six weeks in charge, is set to face hostile questions from Tory and opposition MPs in a House of Commons that is expected to be febrile.
Confederation of British Industry principal economist Martin Sartorius said the rising inflation figure underlined the need for the government to give more details on its revised energy support package.
“The prospect of household energy bills rising sharply again in April 2023 emphasises the need for government to set out the details of any future targeted support sooner rather than later, in addition to how the country will establish its longer-term energy security,” he said.
Jack Leslie, a senior economist at the Resolution Foundation think tank, which specialises in work on living standards, said family incomes would “continue to fall sharply”.
Alice Haine, a personal finance analyst at investment platform Bestinvest, said the slight increase “might seem modest, but consumers aren’t out of the woods yet as inflation is expected to increase again from here — further eroding purchasing power at a time when borrowing costs are also continuing to rise”.
Household finances are still being affected by the rising price of groceries, she said.
“The hope is that the cap on energy bills this winter will help to curb the alarming jumps in inflation that have become the norm in recent months and lead to a peak before the end of the year,” Ms Haine said.
September’s inflation reading will make important reading for the Treasury as it used to decide increases for a number of key policies.
For example, the CPI rate will be used as part of the Work and Pensions Secretary’s annual benefits uprating review.
If the government decides to uprate benefits by inflation, this is the percentage they will be increased by. The increase will come into effect from next April.
September’s inflation figure is also the one used by the department within the triple-lock pension commitment.
The triple-lock means pensions will rise by the highest of three figures: average earnings, CPI inflation based on September’s rate or 2.5 per cent.
With average earnings most recently hitting 5.4 per cent, it is widely expected that pensions would rise by the inflation rate in April next year.
However, on Tuesday, Downing Street indicated ministers could ditch their commitment to the triple lock as Mr Hunt looks for more cuts to fill the government’s financial black hole.
The inflation rate will also be used to decide the property tax increase facing high street businesses.
MATCH INFO
Manchester United 1 (Rashford 36')
Liverpool 1 (Lallana 84')
Man of the match: Marcus Rashford (Manchester United)
Quick pearls of wisdom
Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”
Know how to fight: Shetty married his wife, Radhi, three years ago (he met her in a meditation class before he went off and became a monk). He says they’ve had to learn to respect each other’s “fighting styles” – he’s a talk it-out-immediately person, while she needs space to think. “When you’re having an argument, remember, it’s not you against each other. It’s both of you against the problem. When you win, they lose. If you’re on a team you have to win together.”
Scoreline:
Cardiff City 0
Liverpool 2
Wijnaldum 57', Milner 81' (pen)
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
How to report a beggar
Abu Dhabi – Call 999 or 8002626 (Aman Service)
Dubai – Call 800243
Sharjah – Call 065632222
Ras Al Khaimah - Call 072053372
Ajman – Call 067401616
Umm Al Quwain – Call 999
Fujairah - Call 092051100 or 092224411
The specs
Engine: 3.0-litre 6-cyl turbo
Power: 374hp at 5,500-6,500rpm
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Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
'Shakuntala Devi'
Starring: Vidya Balan, Sanya Malhotra
Director: Anu Menon
Rating: Three out of five stars
Indika
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Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
The Farewell
Director: Lulu Wang
Stars: Awkwafina, Zhao Shuzhen, Diana Lin, Tzi Ma
Four stars
Ipaf in numbers
Established: 2008
Prize money: $50,000 (Dh183,650) for winners and $10,000 for those on the shortlist.
Winning novels: 13
Shortlisted novels: 66
Longlisted novels: 111
Total number of novels submitted: 1,780
Novels translated internationally: 66
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Keep it fun and engaging
Stuart Ritchie, director of wealth advice at AES International, says children cannot learn something overnight, so it helps to have a fun routine that keeps them engaged and interested.
“I explain to my daughter that the money I draw from an ATM or the money on my bank card doesn’t just magically appear – it’s money I have earned from my job. I show her how this works by giving her little chores around the house so she can earn pocket money,” says Mr Ritchie.
His daughter is allowed to spend half of her pocket money, while the other half goes into a bank account. When this money hits a certain milestone, Mr Ritchie rewards his daughter with a small lump sum.
He also recommends books that teach the importance of money management for children, such as The Squirrel Manifesto by Ric Edelman and Jean Edelman.
The specs
BMW M8 Competition Coupe
Engine 4.4-litre twin-turbo V8
Power 625hp at 6,000rpm
Torque 750Nm from 1,800-5,800rpm
Gearbox Eight-speed paddleshift auto
Acceleration 0-100kph in 3.2 sec
Top speed 305kph
Fuel economy, combined 10.6L / 100km
Price from Dh700,000 (estimate)
On sale Jan/Feb 2020
Veere di Wedding
Dir: Shashanka Ghosh
Starring: Kareena Kapoo-Khan, Sonam Kapoor, Swara Bhaskar and Shikha Talsania
Verdict: 4 Stars
The years Ramadan fell in May
SPECS
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