Petrol prices, energy bills, shrinkflation and the availability of food products and toys have become hot topics of late across the country and Wednesday’s official statistics will be crucial for consumers, investors and central bankers.
Figures last month showed that inflation had leapt to its highest level for more than nine years after a record jump in August, heaping fresh pressure on household budgets and businesses and stoking fears of higher interest rates.
The Office for National Statistics (ONS) said the consumer prices index (CPI) measure of inflation jumped from an annual rate of 2 per cent in July to 3.2 per cent in August - the highest level since March 2012.
The Bank of England (BoE) has already suggested that inflation could top 4 per cent by year end - well above its 2 per cent target - though others fear it could peak much higher amid soaring utility costs and continuing supply shortages.
Analysts at investment platform and brokerage AJ Bell noted: “Inflation is effectively a tax, since it erodes the real-terms purchasing power of the money in consumers’ and corporations’ pockets, especially if wage growth does not match or beat the rate of price increases.
“Throw in the UK government’s 1.25 percentage point social care levy – the equivalent of some £12 billion – and panic at the pumps and it will be interesting to see if the post-pandemic recovery in consumer confidence is starting to peter out.”
Kevin Brown, savings specialist at Scottish Friendly, said: “With prices soaring – we think nearer 5 per cent, rather than the BoE’s 4 per cent prediction – people are going to largely batten down the spending hatches and this is going to kill off the recovery in its relative infancy.”
The ONS said August’s month-on-month inflation increase, which was the largest since records began in 1997, was likely to have seen some impact from the supply chain crisis, which it said helped push up food and non-alcoholic drinks prices during the month.