Household spending falls as inflation hits three-year high. Official statistics showed consumer price inflation rose more than expected to 5.2% in September from 4.5% in August – the highest since September 2008 – as household energy bills soared, and don’t we know it or rather feel it in our pockets!
The rise was largely driven by a jump in average gas bills of 13% and an increase of 7.5% in electricity bills in September.
Food and transport costs were also significantly higher than a year earlier – 6.4% and 8.9% respectively provoking warnings from economists that high inflation will hurt already flat economic growth as consumer spending falters.
One factor that has set the recent recession apart from other similarities is a fall in food purchases, not previously seen in downturns.
So is it any wonder that food charities who help the growing population who are going hungry in Britain, say they have seen a 20 per cent rise in demand for food.
September's consumer prices index (CPI) will be used to determine next April's rise in the basic state pension, piling pressure on the public purse but bringing little but some relief for hard-pressed pensioners.
As for those of us on other benefits especially JSA things are set to get harder still this winter.
Employment benefits, such as jobseeker's allowance (JSA) and income support are also calculated using the September CPI rate, meaning the JSA could increase by £3.31 to £70.81 a week, hardly enough to keep the wolfs from the door.
"Crikey. Batten down the hatches. Stock the nuclear bunker. Don your hard hats. Britain’s economic prospects have worsened so much in the past month that eight of the Bank of England’s nine rate-setters, who were happy to leave quantitative easing (QE) unchanged at £200bn in September, were rushing to add another £75bn just 30 days later." So said the Tory Daily Telegraph, and when they are articulating such scepticism should we worry?