Commenting on this morning’s latest ONS figures on inflation, Melanie Baker, Senior Economist at Royal London Asset Management said:
“Food price inflation is now painfully high in the UK. The CPI data shows households on average are paying more than 85% extra for their electricity, gas and other fuels than they were paying a year ago, although some of the extra help governments have provided to households for fuel bills won’t be counted by the ONS in the CPI figures.
“Although ‘core goods’ inflation is falling which is likely helped by easing supply chain pressures, higher food, energy and services inflation are offsetting the impact for now.
“The general trend in domestically-driven inflation still seems to be worsening which – in isolation – supports further rate hikes from the Bank of England. Looking beyond just the core inflation measure, services inflation rose again and is driven by a number of sub-categories. More than half of the main CPI divisions contributed positively to the change in year-on-year CPI inflation in October. Meanwhile, yesterday’s pay data for weekly average earnings surprised on the upside.
“However, the outlook for inflation, monetary policy and the wider economy should be clearer after Thursday’s Autumn Statement. Decisions on future energy bill support and the degree of front/back-loading of fiscal tightening will be among the key things to watch.”
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The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.