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βIs inflation back?β β that was the very first question we posed when On The Money launched back in early September.
It would certainly seem so. Since the start of this year, CPI inflation β the Consumer Price Index - has grown steadily from less than half of one percent in February, to 3.2 percent in August β a nine-year high.
And now, new figures show inflation remains way above the Bank of Englandβs 2 per cent target, with prices in September some 3.1 per cent higher than September 2020. The marginal easing of CPI inflation compared to August doesnβt alter to inflation outlook.
βThere are huge price pressures in the pipeline, and inflation well above 4 per cent is still likely by the end of the year,β says former Treasury economist and friend of the show Julian Jessop.
One reason inflation dipped slightly last month September β with prices still rising sharply year-on-year, but slightly less quickly than in August β was the increase in restaurant prices in September 2020, given that Chancellor Rishi Sunakβs "eat-out-to-help-out" discount scheme finished at the end of August last year.
But todayβs inflation figures, set against a backdrop of severe lorry driver shortages and creaking domestic and global supply chains, shows ongoing upward prices pressures.
Average petrol prices in September, for instance, were 134.9p a litre, up from 113.3p a year earlier β thatβs a 20% rise. And thatβs before panic buying at the end of September and early October pushed up fuel prices even more. This month, weβve got further cost of living rises, amidst soaring wholesale gas and electricity costs.
Plus, even in these September numbers, we see input price inflation hitting 6.7 percent, up from 6 per cent in August. And higher input costs, of course, then feed through to rising prices in the shops. Inflation is a global phenomenon.
Eurozone inflation is now 3.4 per cent and rising. Inflation is up at 5.4 per cent in the US.
Speculation is rife the Bank of England, having long insisted UK inflation is βtransitoryβ, will now raise interest rates at its November meeting of the Monetary Policy Committee β in not much more than a fortnight.
And thatβs our βOn the Moneyβ question today. Are we in for a November interest rate rise?