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The Markets
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The Markets
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Financial Services

UK inflation hits four-decade high of 11.1% as energy and food costs soar

The higher-than-expected figure would have been worse without the energy price cap, said the ONS

UK inflation hit a 41-year high of 11.1% in October, much worse than the expected figure of 10.7% and well above the Bank of England's 2% target.

Higher energy bills pushed the annual inflation rate up from 10.1% in September, which puts more pressure on the Bank to raise interest rates further.

The Office for National Statistics said the figure would have been 13.8% without the energy price cap.

Rising food prices also contributed to the increase, with food price inflation of 16.4% the highest since September 1977.

But core inflation, which excludes food, energy, alcohol and tobacco, was steady at 6.5%, although still well above target.

Meanwhile, a fall in the price of petrol and other raw materials took some of the pressure off Britain's businesses.

Grant Fitzner, the ONS chief economist, said: "Over the past year, gas prices have climbed nearly 130%, while electricity has risen by around 66%.

"Increases across a range of food items also pushed up inflation.

"These were partially offset by motor fuels, where average petrol prices fell on the month, while the price for diesel rose, taking the disparity in price between the two fuels to the highest on record."

The news comes ahead of the crucial Autumn Statement due to be delivered by Chancellor Jeremy Hunt on Thursday, and is set to include spending cuts and tax rises.

Hunt said: "We cannot have long-term, sustainable growth with high inflation. Tomorrow I will set out a plan to get debt falling, deliver stability and drive down inflation while protecting the most vulnerable."

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