According to official data, price increases slowed marginally in September when the economy reopened.
In the year to September, the rise in the cost of living, as measured by the Consumer Prices Index, decreased to 3.1 percent, down from 3.2 percent in August.
The major driver of price increases was higher transportation costs.
It comes after the Bank of England warned that increasing inflation will force it to “act,” implying that interest rates might be raised shortly.
According to the Office for National Statistics (ONS), the inflation rate decreased somewhat last month as restaurant costs climbed less this August than they did last year when the Eat Out to Help Out Scheme was in effect.
On Mondays, Tuesdays, and Wednesdays, customers received a 50% discount from the government on meals up to £10.
“However, this was somewhat offset by most other categories, notably price hikes for furniture and home items and food prices decreasing more slowly than this time last year,” said Mike Hardie, head of pricing at the ONS.
“The cost of items produced by manufacturers increased once more, with metals and machinery exhibiting significant price increases. During the summer, road freight prices for UK firms continued to climb.”
Simply defined, inflation refers to the pace at which prices grow; for example, if the price of a £1 jar of jam rises by 5p, the inflation rate is 5%.
It applies to services as well, such as getting your nails done or your car valeted.
Low amounts of inflation may go unnoticed from month to month, but over time, these price increases may have a significant influence on how much you can buy with your money.
UK Families Are Feeling The Pinch
Despite a little decrease in September, the 3.1 percent growth is still much above the Bank of England’s objective of 2%.
Last month, transportation expenses contributed the most to price hikes.
Average petrol prices were 134.9 pence per litre in September 2020, compared to 113.3 pence per litre in September 2020, when travel was restricted.
According to the ONS, the price of gasoline in September 2021 was the highest since September 2013.
According to Suren Thiru, head of economics at the British Chambers of Commerce, “with the hike in the energy price ceiling, partial reversal of the VAT reductions for hospitality and tourism, and continuing supply chain disruption,” more price increases are likely in the coming months.
Rising inflation, he said, may stymie the UK’s economic recovery by limiting people’s purchasing power and companies’ profit margins.
“The little easing back of inflation today does not affect the cost of living problem facing consumers,” said Ed Monk, investment director for personal investing at Fidelity International.
Many household products are becoming more expensive, he added, and customers may face more price hikes if interest rates shift.
“The last thing homeowners want to worry about is their mortgage payments going up as well, but that now appears more plausible after the Bank of England signaled that it is ready to intervene – maybe this year.”
Ruth Holroyd is in charge of handling the family’s weekly shopping. She told news outlets, “We’re just starting to notice the squeeze a little bit.”
“I’ve seen that overall retail costs are higher, but when pricing for goods like grapes and strawberries in a punnet remain the same, the punnets have decreased, so you don’t receive as much.”
Her main concern is the impact of growing energy costs. She used to be a client of People’s Energy, but the company went out of business in September after failing due to rising gas costs.
Ruth estimates that the family’s monthly energy cost will increase from £120 to £250.
Ruth adds that family pleasures are rare these days due to cost: “What would be very lovely is to be able to sometimes let your hair down and fantasize of a really beautiful trip or being able to take your children out somewhere.”
“Things like that are something we’d like to do more of.”