Inflation outstripped forecasts and rose to 4.2% last month to hit its highest level in almost a decade as spiralling energy prices pushed up the cost of living.
But what does this mean? Our experts answer all your questions
thetimes.co.uk/article/inflat…
But what does this mean? Our experts answer all your questions
thetimes.co.uk/article/inflat…
Why is inflation rising? 📈
The biggest driver that sent consumer price inflation to 4.2% was soaring energy prices. Household electricity, gas and other fuel prices jumped by 22.9% in the year to October, while petrol prices and other transport fuel costs were up 21.5%.
The biggest driver that sent consumer price inflation to 4.2% was soaring energy prices. Household electricity, gas and other fuel prices jumped by 22.9% in the year to October, while petrol prices and other transport fuel costs were up 21.5%.
The increase to VAT rates in the hospitality and tourism industries – which were temporarily cut to provide support during the pandemic but went from 5% to 12.5% at the beginning of last month – also had an effect.
Why are energy and fuel prices so high?⛽️
Surging global natural gas prices are sending energy costs spiralling. A sharp rebound in demand for gas as economies emerge from the Covid-19 pandemic is having an effect.
Surging global natural gas prices are sending energy costs spiralling. A sharp rebound in demand for gas as economies emerge from the Covid-19 pandemic is having an effect.
This has been compounded by low inventory levels after a particularly cold winter in 2020 and disruption in supplies from Russia. Unusually low wind output, which has made Britain more reliant on gas, has also contributed.
thetimes.co.uk/article/power-…
thetimes.co.uk/article/power-…
Will interest rates rise? 📈
This is the question that is preoccupying financial markets. Economists reckon the latest inflation reading has increased the likelihood that policymakers will lift the benchmark rate from its record low of 0.1% when they next meet in December.
This is the question that is preoccupying financial markets. Economists reckon the latest inflation reading has increased the likelihood that policymakers will lift the benchmark rate from its record low of 0.1% when they next meet in December.
This is partly because the inflation data comes a day after strong official jobs market figures, which indicated that the wind-down of the government’s furlough scheme at the end of September had not led to a surge in unemployment.
Will raising rates really tackle inflation? 🤔
It depends on what is driving inflation and whether or not the rise in prices is temporary or persistent.
It depends on what is driving inflation and whether or not the rise in prices is temporary or persistent.
The biggest contributor to the rising cost of living is surging energy bills, which are being driven higher by spiralling gas prices worldwide. There is nothing the Bank can do to influence global gas markets.
Read a more detailed analysis here:
thetimes.co.uk/article/why-is…
thetimes.co.uk/article/why-is…
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