October 20 2014 Latest news:
Tuesday, November 13, 2012
UK inflation leapt to 2.7% last month after university students were hit with a near-trebling in tuition fees and households faced rising food costs, official figures revealed today.
The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) rose by the largest amount in more than a year between September and October, up from 2.2%.
The Government’s move to lift the tuition fees cap to £9,000 was the biggest factor behind the bigger-than-expected hike in the cost of living, according to the ONS.
The rise was far more than economists had pencilled in and marks the first time inflation has risen since July.
The ONS said education costs jumped by 19.1% last month - the largest increase since records began.
Students starting at university this year will have to pay up to £9,000 a year, increased from a cap of £3,375 a year ago.
Food inflation was also behind the rise in CPI after the record wet weather earlier this year left the UK with its worst potato and carrot harvest in living memory, which pushed up vegetable prices, according to the ONS.
Today’s figures also showed that the Retail Prices Index (RPI), which includes housing costs, rose to 3.2% in October from 2.6% in September as mortgage rates also increased.
The RPI rise between September and October was the largest monthly increase for two and a half years.
Inflation had fallen to a near three-year low in September, but there are fears the cost of living will continue to rise as the raft of recent energy bill hikes also start to come into effect.
The ONS said last month’s SSE bill increase - which saw tariffs rise by around 9% - were not taken into account for the October figures.
Other utility firms are increasing prices from this month onwards.
Some experts believe CPI could rise as high as 3.5% by the middle of next year.
The figures will be in sharp focus ahead of the Bank of England’s inflation report tomorrow.
Rising inflation will likely also fuel speculation that the Bank will hold off from taking further action under its economy-boosting quantitative easing (QE) programme.
The Treasury said today’s figures were “disappointing”, but inflation remains far lower than its peak of 5.2% last September.
James Knightley, an economist at ING Bank, said he expected inflation to rise to 3% by January.
Economist Samuel Tombs, of Capital Economics, said the inflation data provides an “uncomfortable backdrop” to the Bank’s inflation report tomorrow.
“Nonetheless, we still think that the weakness of economic activity will bring inflation down further in time,” he added.