Rising costs for garments, hotel rooms and petrol have led to the best rate of inflation in nearly two years, official figures show. Inflation rose to 1.0% in September, up from 0.half dozen percent in August, the Office for National Statistics (ONS) said.
Clothing saw its biggest price rise since 2010 and fuel, that was falling a year ago, was additionally more expensive.
But, the ONS said there was “no express proof” the weaker pound was the explanation for higher costs.
Kamal Ahmed: Not all about sterling – however
Who wins from inflation?
September’s inflation figure has traditionally been crucial as a result of it determined what rate edges would increase by in the subsequent year.
But, with the govt having frozen many benefits and tax credits until twenty, several families can not see them continue with rising costs.
More than eleven million households can, on average, be £360 a year worse off if inflation rises to a pair of.8p.c in the subsequent few years, in keeping with the Institute for Fiscal Studies (IFS).
For families on lower incomes who receive additional in benefits, the hit will be bigger – on average a discount of £470 a year, the IFS said.
Rising prices can “undoubtedly be tough on those with low incomes,” said Ben Brettell, senior economist at Hargreaves Lansdown.
“It’s also not sensible news for savers who are losing cash in real terms,” he added.
The jump in Consumer Value Index (CPI) inflation from 0.six% to one.zero% in September was the largest month-on-month increase since June 2014.
The 1p.c rate is the highest since November 2014. But, ONS head of inflation Mike Prestwood said it had been “low by historic standards”.
Economists have predicted the value of home goods can rise more, notably when the autumn in the pound makes food and clothing from abroad more expensive.
Sterling has dropped nearly 20% against the greenback since the Brexit vote, together with a fivep.c fall this month after Prime Minister Theresa May set a timeline for the UK’s withdrawal from the EU.
Analysis, Kamal Ahmed, economics editor
The come back of higher levels of inflation is doubtless to be one in every of the defining problems for Theresa May’s government.
The explanation for that is simple.
Once the figure for inflation rises on top of the figure for wage growth – at present running at just over a pair ofp.c – then incomes start falling in real terms.
That’s politically uncomfortable for any government, particularly one that has staked its name on making the economy work “for everybody”.
Howard Archer, chief economist at IHS Global Insight, said: “Even before the pound has sunk to new lows in October, it is notable that price pressures were building up down the provision chain.”
The recent row between Tesco and Unilever over the worth of Marmite and different foods was “a style of things to come”, he said.
Kathleen Brooks, analysis director at Town Index, said that with the fall in the pound: “Oil imports are obtaining additional expensive, clothing imports also are costing more, and therefore the weak pound is boosting the tourism business, which appears to already be fuelling a rise in hotel costs.”
Others said these pressures left the UK heading in the right direction to exceed the Bank of England’s target of a twop.c inflation rate.
Chris Williamson from forecasters IHS Markit said the Bank’s target may be “breached inside months, though much depends on the exchange rate and the extent to that prices continue to rise”.
The CBI business lobby group agreed, saying: “It’s still early on for sterling’s recent depreciation to affect today’s inflation figures, however we do expect it to push up prices through the course of next year, that can hit the pound in individuals’s pockets.”
Maternity and paternity pay, along with some incapacity edges, are set to rise, though, as they’re some of the few remaining edges linked to the September inflation figure.
The basic state pension is also possible to be raised by perceptiveness from next April, taking it over £122 every week.
Since 2010, the govt’s “triple-lock” policy has meant state pensions rise by the inflation rate, average earnings or two.5% – whichever is highest.
CPI inflation measures the value of a “searching basket” of more than 700 items, from the value of ladies’s leggings to a multi pack of fizzy drinks.
The Retail Prices Index (RPI) measure of inflation, which includes mortgage interest payments, rose to a pair Proterozoic in September from intercontinental in August.