Inflation stays elevated at 6.7 per cent in September
Jeremy Hunt says UK inflation remained on a downward path in the longer term
LONDON, ENGLAND – NOVEMBER 17: Chancellor of the Exchequer Jeremy Hunt departs Downing Street to present the Autumn Statement to the House of Commons on November 17, 2022 in London, England. The Chancellor hopes his fiscal plans will restore market confidence in the UK’s economic outlook, as well as head off a cost-of-living crisis. (Photo by Rob Pinney/Getty Images)
INFLATION remained elevated in September, official data showed Wednesday (18), dashing expectations of a dip as easing food and drink prices were offset by higher energy costs.
The Consumer Prices Index held at 6.7 per cent last month, after unexpectedly slowing to the same level in August, the Office for National Statistics (ONS) said in a statement.
That dashed market predictions for a further slowdown to 6.6 per cent.
Chancellor of exchequer Jeremy Hunt insisted that UK inflation remained on a downward path in the longer term.
“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,” he said.
However, inflation is still running at more than three times the Bank of England’s target level of two pe rcent.
That is despite the central bank’s aggressive campaign of multiple interest rate hikes since late 2021.
The BoE had left its key rate unchanged at 5.25 per cent last month, snapping 14 straight hikes after inflation unexpectedly slowed in August from 6.8 percent in July.
“After last month’s fall, annual inflation was unchanged in September,” said ONS chief economist Grant Fitzner.
“Food and non-alcoholic drinks prices eased again across a range of items with the cost of household appliances and air fares also falling this month.
“These were offset by rising prices for motor fuels and the cost of hotel stays.”
KPMG chief economist Yael Selfin said inflation was expected to slow further, but energy prices remained a threat.
“Inflationary momentum is set to weaken in the coming months,” Selfin noted.
“Energy prices have re-emerged as an upside risk to inflation. Crude oil prices are up by over 20 per cent since June, while UK gas prices are the highest since February.”