Inflation in the UK has returned to double digits after climbing to 10.1% in the year to September.

The latest data published by the Office for National Statistics (ONS) has the UK’s Consumer Prices Index (CPI) inflation reading back at July’s recent high, after it dipped to 9.9% in the 12 months to August.

This means price rises are back at their highest annual rate in the ongoing ONS series, which began in January 1997, and would last have been higher 40 years ago. ONS estimates for 1982 have inflation ranging between 11% in January, down to approximately 6.5% in December.

Rising food prices made the largest upward contribution to the change in CPI annual inflation rates between August and September 2022, the ONS stated.

Figures also confirmed that CPI inflation increased on a monthly basis by 0.5% in September, compared with a rise of 0.3% in September last year.

Commenting on the figures, partner at Killik & Co, Rachel Winter, said: “The UK faces yet another rise in inflation after a month of turmoil in the financial and political spheres. This continues to weigh heavily on the minds and wallets of consumers as we witness a sustained rise in prices that is putting a strain on household budgets for many.  

“The longer-term inflationary outlook is not good for Britain, despite the very recent reversal of the planned tax cuts. While changes to the duration of the energy bill price cap will help to limit the level of government debt, we are likely to see higher energy bills feeding into the inflation number when the freeze comes to an end in April.”

Financial planning expert at abrdn, Colin Dyer, added: “Inflation resumed its upward climb in September, putting even more pressure on consumers’ already stretched pockets.
 
“And with the British Chambers of Commerce expecting inflation to spike at 14% over the next quarter – far above the government’s 2% target – it’s time for savers to take matters into their own hands if they want to see growth with their finances.  
 
“It’s more important than ever for people to plan ahead and consider ways to mitigate the impact of inflation on their hard-earned savings. This will be particularly key for those relying on cash savings, like retirees, as they will be seeing those savings lose real term value as inflation increases.”  

The latest inflation figure is particularly important because it means millions of retirees will also find out what their retirement income is likely to be from next spring.

According to self-invested technical specialist at Barnett Waddingham, James Jones-Tinsley, a 10.1% increase in payments for those on a full state pension will mean a jump in April 2023 from £185.15 a week to £205.52, and an annual rise from £9,627.80 to £10,686.86. However, this would depend on the government upholding its pensions ‘triple lock’ promise.

“Doing so has been a Conservative Party pledge for several months, including a promise from the new Parliamentary Under-Secretary of State for Pensions and Growth, Alex Burghart, as recently as last Friday,” Jones-Tinsley highlighted.

“However, the Chancellor’s most recent speech cast doubt on this, and understandably so. Each 1% increase in the state pension will cost the government an additional £1bn per year, so we’re now looking at an additional cost of around £10bn next year; this is approaching a quarter of the remaining fiscal ‘black hole’ that Hunt is looking to fill.

“Trapped between a rock and a hard place is an understatement. The government must choose between their fiscal principles, and their political survival.”

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