UK inflation climbs to 2.3% in October, driven by energy costs

The United Kingdom’s consumer price index (CPI) surged to 2.3% in October, up from 1.7% in September, according to data from the UK Office for National Statistics (ONS).

The rise, largely driven by escalating energy prices, highlights mounting pressures on households amid elevated costs for electricity and gas.

Month-on-month, inflation also accelerated, with the CPI climbing by 0.6% in October 2024 compared to a modest 0.1% increase in October 2023.

The ONS highlighted that the largest upward contributions to inflation came from housing and household services, driven mainly by energy prices.

Electricity and gas costs rose significantly following an adjustment to the energy price cap by the Office of Gas and Electricity Markets (Ofgem).

In October 2024, Ofgem’s energy price cap rose by £149 annually for an average household paying by direct debit for dual fuel, bringing the annual bill to £1,717.

This adjustment contributed to a 5.5% annual increase in the housing and household services category, compared to 3.8% in September.

Conversely, lower ticket prices for live music and theatre events helped offset some of the inflationary pressures in the recreation and culture sector.

READ ALSO: Nigeria’s highest inflation rate 2024

Grant Fitzner, Chief Economist at the ONS, commented: “Higher energy costs were the main driver of inflation in October, though price falls in some recreational areas provided a partial counterbalance. Businesses also benefited from falling raw material costs, particularly crude oil prices.”

The consumer prices index, including owner occupiers’ housing costs (CPIH), rose by 3.2% in the 12 months to October, up from 2.6% in September.

Food and non-alcoholic beverage prices edged higher as well, rising by 1.9% in October compared to 1.8% in September.

On November 7, the Bank of England (BoE) predicted inflation would rise further, reaching 2.5% by the end of 2024, before gradually declining.

However, the BoE cautioned that inflation may not return to its 2% target until mid-2027, a year later than previously anticipated.

Economists warn that the rising energy costs could exacerbate the cost-of-living crisis, particularly as households head into the winter months.

The latest inflation data could also prompt a reassessment of monetary policies, though the BoE has signaled a cautious approach to further interest rate adjustments.

Mark Reynolds, an economist at Capital Economics, noted: “The uptick in inflation reflects external shocks, especially in energy markets, but underlying inflationary pressures remain subdued. Policymakers will need to balance controlling inflation with supporting economic growth.”

The latest figures underline the UK economy’s vulnerability to global energy price fluctuations and domestic policy changes, adding pressure on households already grappling with high living costs.