Inflation jumps to 2.7% in October

Inflation in the UK rose sharply to 2.7 per cent in October up from its 24-month low of 2.2 per cent in September, latest figures from the Office for National Statistics (ONS) have shown.

The Government’s lift on capping university tuition fees was cited as the main contributor to the increase in the Consumer Prices Index (CPI) – the largest increase in over a year.

The maximum annual tuition fees for new UK and EU students in England rose by 19.1 per cent on average to £9,000 per year.

There were small upward rises in food and drink prices due to wet weather affecting crop yields, clothing and footwear price increases and higher transport costs.

The Retail Prices Index (RPI) also rose to 3.2 per cent in October from 2.6 per cent from the previous month, pushed up by rising house prices.

Economists had predicted an increase in inflation, but at a smaller rate to 2.4 per cent.

Commenting, the Telegraph’s head of business Damian Reece said that many of the factors leading to the inflation increase would hit ‘consumers in the pocket’.

“With the Eurozone crisis looking so bad, exports are likely to struggle over the next year or so,” he added.

“It had been hoped that consumer spending with the low inflation would give the economy a decent boost. The latest figures put that at risk.”

The squeeze in spending will also come as a worry to retailers as they approach their busiest period in the run up to Christmas.

Chief economist at the British Chambers of Commerce (BCC) David Kern warned that with higher energy bills in the pipeline, inflation could rise above 3 per cent in the next few months.

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