UK inflation rate remains at 6.7% in September, defying predictions of a fall

Wed 18 Oct 2023
Posted by: Phillip Adnett
Trade News

Rate of inflation going up

The UK’s inflation rate has held steady at 6.7% in September, defying earlier predictions of a slight fall.

A poll of economists by Reuters had predicted a slight drop in the rate.

According to the latest figures from the Office for National Statistics (ONS), core inflation fell to 6.1% last month, although this drop was lower than initially predicted.

Core inflation removes more volatile commodities like energy and food from the overall cost of goods and services.

Chancellor Jeremy Hunt said: “As we have seen across other G7 countries, inflation rarely falls in a straight line, but if we stick to our plan then we still expect it to keep falling this year.

“Today’s news just shows this is even more important so we can ease the pressure on families and businesses.”

Energy prices high

The ONS said a surge in petrol and diesel prices offset any falls in the cost of food and other household goods.

Yael Selfin, chief Economist at KPMG UK, told City AM that the data showed that energy prices have “re-emerged as an upside risk to inflation”.

Selfin said that crude prices had risen by 20% since June and the UK faced the highest gas prices in Europe.

According to the FT, September’s year on year inflation rate exceeded France and Germany’s, as well as the EU-wide rate.

Eyes on BoE

Today’s (18 October) news signals an end to a series of successive drops in the rate of inflation, but a continuation of the government’s battle against stubbornly high rates.

Andrew Bailey, governor of the Bank of England (BOE), had warned over the past weeks that there was still some way to go to win the battle.

Last Friday (13 October), Bailey stressed that any decision on future rate rises would be “tight”, according to Reuters.

Earlier this week, wages outpaced inflation for first time in almost two years, easing pressure on the BoE and signalling a possible end to high inflation.

Wages rose at an annual rate of 7.8% between June and August, the BBC reports.