Inflation surged to 5.2 per cent during September after households were forced to cope with rising gas and electricity bills.
The Consumer Price Index (CPI) rose from 4.7 per cent last month and some economists expect a further increase by the end of the year after which they predict a sharp slowdown in inflation.
The Office for National Statistics said the main force behind September's rise came from gas and electricity bills. Gas prices were 49.9 per cent higher while electricity rose by 30.3 per cent.
Food inflation eased to 12.7 per cent from 14.5 per cent as the cost of dairy products fell.
However, policy-makers now believe recession is now a greater worry than inflation. The Bank of England, in a move co-ordinated with other central banks around the world, cut interest rates by half a percentage point last week in a bid to boost battered markets.
The Bank’s Monetary Policy Committee (MPC) has shifted its concern from inflation to the risk of a severe economic downturn.
Andrew Sentance, a previously hawkish member of the MPC, said yesterday: "The severe stresses in the financial system over the last month and the downside news from the real economy have certainly increased the risks of a bigger and more sustained downturn."
Helen Power |
