London Daily

Focus on the big picture.
Wednesday, Oct 01, 2025

Rising energy and food bills tip inflation to highest level since 1981 at 11.1%

Rising energy and food bills tip inflation to highest level since 1981 at 11.1%

The rate of inflation rises by much more than economists expected in October, piling pressure on the Bank of England to maintain the pace of interest rate rises to curb demand in the economy.

There has been a higher than expected leap in the rate of inflation, to a 41-year high of 11.1% last month, led by the latest rise in energy bills.

The Office for National Statistics (ONS) revealed the increase, from 10.1% in September, as the cost of light and heating for homes rose further despite help from the government's energy price guarantee that limits wholesale charges for gas and power.

Food was cited as the other major element adding inflationary pressure during October, rising at the fastest annual pace since 1977.

The ONS estimated that the 11.1% reading for the consumer prices index (CPI) measure of inflation was the highest since October 1981.



It added that prices rose between September and October 2022 by as much as they did in the entire year to July 2021.

Economists polled by Reuters had expected the rate of inflation to rise to 10.7% - itself still almost double the pace of wage growth.

Surging energy prices have been the main driver of the cost of living crisis - mostly a consequence of Russia's invasion of Ukraine in February that sent the cost of many commodities such as wheat, and the cost of producing them, through the roof.

Wholesale energy costs currently remain below their conflict era peaks, raising hopes that the worst inflation is behind us.

However, there remains a lack of clarity on the support for energy bills beyond April, when the price guarantee will be reviewed. Further information could come in the chancellor's autumn statement to MPs due on Thursday.

Jeremy Hunt is tipped to protect the most vulnerable from the worst by raising benefits and pensions in line with inflation but has warned that we all face higher taxes to help balance the books.

PM Rishi Sunak told a news conference at the G20 Summit in Bali: "My absolute number one priority is making sure that we deal with the economic situation that we face at home.

"With more news of inflation today, it's the number one thing on people's minds. It's the thing that's causing most anxiety, opening up bills, the emails come in with rising prices. And that's why it's right that we grip it."

The Bank of England had expected that inflation would have surged above 13% last month without the government energy bill intervention because average annual bills under the Ofgem-set price cap would have skyrocketed to around £3,450.

Policymakers were tipped, by financial markets, to impose a further 0.5 percentage points increase to Bank rate when its rate-setting committee meets again next month.

That would take the rate to 3.5%.

But the higher than expected inflation figure could mean a more aggressive rate rise is considered - piling even more misery on borrowers after November's 0.75 percentage point hike.

The Bank has signalled that curbing inflation is its priority despite revealing last month that it expected the country was already in recession.

Official figures last week showed the economy contracted by 0.2% in the three months to September.

The Bank has raised the prospect of seven further quarters of negative growth.

Rachelle Earwaker, senior economist for the living standards-focused Joseph Rowntree Foundation said of the gloom: "The cost of living has millions fearing for the future, contributed to by soaring cost rises for food, transport and energy.

"Every day sees still more stories of people selling their possessions, or borrowing money at punishing interest rates, just to afford these essentials."

Head of research for the British Chambers of Commerce business group, David Bharier, said separate ONS data covering factory gate prices indicated that inflation was yet to peak.

"We speak to thousands of businesses who tell us this is unsustainable", he said.

"Our research shows that confidence is falling fast as many SMEs find it almost impossible to absorb or pass on rising costs.

"While the Bank of England seeks to control inflation through further interest rate rises, this is a blunt instrument that fails to address the core drivers of inflation for most firms: soaring energy costs, global supply chain disruption, and rising staff costs due to labour shortages.

"Ahead of tomorrow's autumn statement, businesses will need to see a clear plan from the chancellor to boost business investment and growth, as well as targeted measures that ease the specific causes of inflation.

"The UK economy otherwise faces a lethal combination of recession and runaway inflation."

Newsletter

Related Articles

0:00
0:00
Close
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
Disney Reinstates ‘Jimmy Kimmel Live!’ after Six-Day Suspension over Charlie Kirk Comments
U.S. Prosecutors Move to Break Up Google’s Advertising Monopoly
Nvidia Pledges Up to $100 Billion Investment in OpenAI to Power Massive AI Data Center Build-Out
U.S. Signals ‘Large and Forceful’ Support for Argentina Amid Market Turmoil
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
Vietnam Faces Up to $25 Billion Export Loss as U.S. Tariffs Bite
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Indonesia Court Upholds Military Law Amid Concerns Over Expanded Civilian Role
Larry Ellison, Michael Dell and Rupert Murdoch Join Trump-Backed Bid to Take Over TikTok
Trump and Musk Reunite Publicly for First Time Since Fallout at Kirk Memorial
Vietnam Closes 86 Million Untouched Bank Accounts Over Biometric ID Rules
×