Food prices on the rise as inflation hits 3% for first time in five years
2 min read
Inflation hit 3% in September for the first time since March 2012, according to Office for National Statistics (ONS) figures.
Rising food prices and transport costs are the main factors behind the rise in the Consumer Price Index from 2.9% in August.
Overall, food prices went up by 0.8% between August and September 2017, compared with a 0.4% fall last year, climbing at the highest rate since October 2013.
Computer games, a change in the way the ONS accounts for air fares, and an increase in fuel prices also contributed to the rise.
Clothing costs, which rose by less than they did a year ago, had a downward effect on the figures .
The trend, which is well above the 2% Bank of England target, will further fuel expectation of an increase in interest rates next month.
The CPIH measure, which also includes housing, reached 2.8% in September, a level not exceeded since March 2012.
The Institute for Fiscal Studies said the figure highlighted the risk of setting benefits rates far in advance, with recipients set to lose out as an unintended consequence.
“This morning’s inflation figure, taken together with the latest inflation forecasts, means that the 4-year freeze on most working-age benefits is now expected to cut the benefits of 10 million families by £450 a year in real terms – up from £320 back when the freeze was first announced.
“The extra £130 loss is not the result of any deliberate decision by the government – it is the consequence of inflation being higher than was expected when the policy was set.”
The figures come after Resolution Foundation research found single earner couples with two children will lose £305 a year as a result of soaring costs.
Senior Economic Analyst at the Resolution Foundation David Finch said the figures demonstrated the need for Chancellor Philip Hammond to unfreeze working age benefits.
“Rising inflation is dealing a double living standards blow to families on low and middle incomes, who are facing shrinking pay packets and reduced state support,” he said.
“But rather than addressing the squeeze, government policy is making things worse by freezing benefits at a time when inflation is almost 3%.”
A spokesperson from the Treasury said: "We understand that families are feeling the effects of inflation and we are helping them with their living costs.
“We've frozen fuel duty, doubled free childcare for nearly 400,000 working parents and cut income tax for 30 million people. Increases to the National Living Wage are also delivering the fastest pay rise for the lowest paid in 20 years.
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