In October, the rate of inflation remained static at 3 percent – opposing anticipation of an increase among policymakers at the Bank of England and economists.
The Office for National Statistics (ONS) stated that the increasing food prices were widely offset by the decreasing fuel costs in October.
Forecasters had anticipated an increase to at least 3.1 percent – a scenario that would have urged the governor of the Bank to write to the Chancellor in order to explain why the measure of the Consumer Prices Index had gone over 3 percent.
The inflation target of the Bank is 2 percent. Earlier this month, it increased interest rates to help stop inflation in its belief that the figure was to hit 3.2 percent in October.
The figures from the ONS are likely to reinforce scepticism among some economists regarding the wisdom of the said rate hike, which has increased the borrowing costs of many families at a time when their spending power is already experiencing a squeeze.
That is because most of the price increases that have pushed inflation to five-year highs were already determined to fall out of inflation calculations early in 2018.
Higher import costs is a consequence of the weaker pound since the Brexit vote in June 2016. It has been passed on to consumers while the average wage increased has failed to keep up with the pace of price growth.
The ONS said that the bulk of upward pressure on inflation in October came from vegetables – increasing by 5.7 percent on an annual basis ahead of Christmas.
It referred to a particular contribution from premium potato crisps.
Food prices were 0.6 percent higher on the previous month while energy costs were 1.3 percent higher, thus, reflecting the decision by British Gas to increase its default tariffs in September.
While fuel costs were down by 0.4 percent in October compared to September, increasing pump prices in past weeks are anticipated to loom large in the inflation calculation of November.
The squeeze on family budgets is a major cause for fears among retailers in the run-up to the crucial Holidays season.
Recently, major grocery chains reporting their progress have been at pains to say that they are doing their best to protect shoppers from the worst of the increasing prices.
Separate industry data that was released by Kantar Worldpanel revealed that inflation was accounting for the majority of the growth in the sector.
It reported a 3.2 percent annual jump in the value of supermarket sales in the 12 weeks to November 5 while sales volumes rose by less than 1 percent.
The investment director at Fidelity International, Maike Currie, stated: “While the Bank of England raised interest rates at the beginning of this month given concerns over inflation, it will take some time for inflation to fall back nearer the Bank of England’s 2% target.
“This means cash-strapped consumers will continue to feel the pinch as wages lag price rises.
“Homeowners on variable rate mortgages, in particular, will be feeling the biggest squeeze having to contend with the prices of everyday goods and services going up, and dealing with rising mortgage repayments.”