Inflation rate rises up to 2.3% in October
(Image Credit: Surrey Live)
The UK's annual inflation rate rose more than expected in October and again exceeded the Bank of England's (BoE) target, as households and businesses faced higher energy bills.
UK prices rose by 2.3% over the 12 months leading up to October, pushing inflation above the Bank of England's target once again. The Bank adjusts interest rates to maintain inflation at 2%. In November, it reduced rates for the second time in 2024, lowering them to 4.75%.
Inflation is the increase of the price of something over time. It is measured by the Office for National Statistics (ONS). They monitor the fluctuations in the prices of hundreds of everyday products each month, including food and energy prices. This virtual basket of goods is updated constantly to reflect shopping trends. For example, hand sanitizers have been removed as the Covid pandemic is not around us anymore.
The ONS monitors price changes over the past year to assess inflation, using the Consumer Prices Index (CPI) as the key metric. Over the 12 months leading up to October 2024, the CPI rose by 2.3%, up from 1.7% in the year ending in September. This represents the highest inflation rate in six months.
Image Credit: BBC
According to the ONS, the impact of rising gas and electricity prices was counterbalanced by a decline in oil prices, which eased transport and raw material expenses for manufacturers. In addition, lower prices for theatre and live music tickets helped limit the sharpest month-on-month price increase since October 2022, which was 0.6%.
In October, the quarterly energy price cap increased by 10% to £1,717, with projections indicating another rise in January, bringing the average annual bill to £1,736. Retailers have warned that policies introduced in Labour’s budget last month could result in higher prices, while the associated tax increases have already impacted consumer confidence.
“We have managed to mitigate the effects by increasing the price of airline ticket”
Emilio González, professor of World Economics at the Francisco de Vitoria University, assures that inflation has affected all sectors that are intensive in the consumption of energy and its derivatives. ‘Electrical companies and the petrol industry have been affected, but also the transport sector, which has suffered from the rise in the price of such an essential element as fuel,’ says González.
The transport sector has also been one of the hardest hit by inflation. The rise in fuel prices has led to changes in company strategies to reduce the negative effects of inflation. William Moore, financial manager in the airline sector, says that inflation and, in particular, the rise in the price of kerosene (jet fuel) have forced companies to adjust their margins, but they have managed to reduce the impact of this situation. ‘We have managed to mitigate the effects by increasing the price of airline tickets and implementing measures to improve efficiency and save costs,’ Moore explains.
