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UK inflation rises to 2.7% in October

UK inflation rose to 2.7% in October, from 2.2% in the previous month, official figures showed today.

The Office for National Statistics (ONS) said that the increase was mainly due to higher university tuition fees and food prices. In particular, education costs rose by 19.1% between September and October after the government raised the maximum annual tuition fees for new UK and EU students in England to GBP9,000.

Food inflation also contributed to the rise in the Consumer Price Index (CPI), after the record rainfall over the summer meant that crop yields were down, resulting in higher vegetable prices. The cost of fruit and confectionery also went up.

The Retail Prices Index (RPI), an alternative measure of inflation which includes housing costs, also rose last month to 3.2%, from 2.6% in September.

The latest figures confirm that people’s incomes are being squeezed even tighter, national trade union centre the TUC claimed today. TUC general secretary Brendan Barber said that millions of workers in the UK who need their pay packets to catch up with the rising cost of living will see the new inflation figures as a big blow.

Inflation could yet rise even higher, the British Chambers of Commerce (BCC) believes.

David Kern, chief economist at the BCC, noted that with higher utility prices now in the pipeline it is possible that annual consumer price inflation will rise above 3% in the next few months, before falling during 2013.

“In the face of major economic challenges, there is only limited scope for the UK to rebalance towards exports and investment over the next year. In these circumstances, the boost to real incomes resulting from low inflation could be one of the main factors for underpinning domestic demand in 2013,” he added.


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