Image Source: Bloomberg
Milk, cheese, and eggs are going up in price at the fastest rate they have in 45 years.
In October, food prices went up 16.2% from the same time last year, which was up from 14.5% in September.
Energy and fuel price have also increased significantly since 1981, which has increased the overall inflation rate.
Many people are having difficulty making ends meet because living costs are rising.
The ONS said it was hardest on low-income households because they spent about half of their income on food and energy, while middle-income households spent about a third.
In October, inflation was 11.1%, the highest rate in 41 years. This is up from the rate of 10.1% in September.
The Chancellor, Jeremy Hunt, is expected to say that billions of pounds and taxes will cut public spending will go up by billions of pounds in Thursday’s Autumn Statement.
The chancellor’s attempt to stop price from rising
Mr. Hunt said that his plans would try to keep prices from going up and up. But he also said that he would have to make “tough but necessary decisions” to put the economy back on track.
The Office for National Statistics (ONS) keeps track of the prices of hundreds of everyday items to figure out how much it costs to live. Inflation is a way to measure how much it costs to live.
The ONS said that in October, the prices of milk, pasta, margarine, eggs, and cereal went up significantly.
Even though bills went up again last month, the main reasons for inflation were still gas and electricity prices.
The Energy Price Guarantee did slow down these price increases, keeping the average household bill at about £2,500 a year.
But the ONS said that gas and electricity prices were still about 130% and 66% higher than they were a year ago.
But it said that if the government hadn’t helped, inflation would have gone up to 13.8%.
Greg Pilley opened the Stroud Brewery & Taproom in Gloucestershire, which sells beer to pubs and shops. He told the BBC that the costs of running his business had increased by 10%.
Energy and food prices have increased since last year because of the war in Ukraine and the COVID pandemic.
As prices have increased, workers in many industries have asked for pay raises to keep up with the living cost. Some industries have even gone on strike, like the railroads.
But some economists think October’s inflation rate of 11.1% might be the highest.
The head UK economist at Capital Economics, Paul Dales, said that prices could go down if the government keeps freezing energy prices.
Raising interest rates
The Bank of England has raised interest rates to 3% to slow down inflation. It hopes that if people have to pay more to borrow money, they will spend less, demand will drop, and price increases will slow down.
But because rates are rising, the cost of mortgages and other loans is also increasing.
People don’t have money to spend, so the UK economy is slowing down. As a result, the economy will probably be in a recession by the end of the year.
The economy shrank by 0.2% from July to September, and the Bank of England said that the UK is in for a rough two-year downturn.
A recession is when an economy shrinks for two sets of three months. In the same way, a sign that the economy isn’t doing well is when companies make less money and unemployment goes up.
In many places around the world, prices are going up. For example, Germany’s rate is higher than the UK’s at 11.6%, while prices in the US went up by 7.7% in the year leading up to October.
But the UK’s economy is doing worse than other large countries, and it is smaller than before the COVID pandemic.
