Britain suffering unique 'labour market shock' from wave of early retirement and long-term sickness, says Andrew Bailey – The Telegraph

Spread the love

Chosen by us to get you up to speed at a glance
A surge in early retirement and long-term sickness has left Britain facing a unique "labour force shock" among rich nations, Andrew Bailey has warned.
The Governor of the Bank of England told MPs the UK is the only industrialised economy to have suffered a sharp fall in the size of its workforce since the pandemic.
The shrinking labour force is one of three drivers behind surging inflation, Mr Bailey said. Data showed price rises climbed to a 41-year high of 11.1pc in October.
The Governor blamed the price rises on a shrinking workforce, supply chain bottlenecks and Russia’s war in Ukraine. Unlike the later two factors, Britain stands alone among developed nations when it comes to a shrinking workforce.
"The UK is the only OECD country showing this pattern of labour force shock," Mr Bailey told MPs on the Treasury Select Committee.
Growing NHS waiting lists have left a record 2.5m people unable to work because of long-term illness. This is up from around 2 million in 2019, with an extra 133,000 people falling out of the workforce as a result of long-term sickness in the three months to September alone.
Chancellor Jeremy Hunt is poised to announce new plans to tackle the long-term sickness epidemic in Thursday’s budget, amid fears a failure to tackle the problem could do lasting damage to the economy.
Other countries in the OECD club of rich nations have not experienced similar drops in the size of their labour force since the pandemic. An analysis by Bank official Jonathan Haskel showed OECD countries generally saw more people enter the jobs market between 2019 and 2022.
Catherine Mann, another member of the rate-setting Monetary Policy Committee, described Britain as a "dramatic outlier". She told MPs she could not understand how hundreds of thousands of people who had left the workforce since 2020 were able to pay their bills.
"This is a puzzle because in principle, with higher wages being offered, that would tend to bring people back into work. And if people are not in the labour force and are not working, how are they managing, given the inflationary environment?"
The jump in October’s inflation rate was driven by sharply higher energy bills and a jump in food prices, leaving the UK with one of the highest rates of growth in the G7 club of rich nations. Only Italian and German inflation rates are currently higher.
Surging prices have forced the Bank of England to raise interest rates to the highest since 2008 in a bid to slow the economy and curb inflation.
Mr Bailey said a slowdown in the housing market had already begun, with a possible two-year recession and hit to incomes likely to drag down prices further.
"If we look at quite a lot of housing market indicators, I think they are all now showing a weakening of both the activity and the price numbers," he said.
The buy-to-let property market has contracted more than expected, Mr Bailey said, because of the "complicated" tax system, which meant many landlords "don’t want to be bothered" with owning a property portfolio any more.
The Governor said other factors that had led to a slowdown in the economy included Brexit. His MPC colleague Swati Dhingra cited a study by the London School of Economics that showed a 6pc extra "Brexit effect" in the price of UK food compared with the rest of the world.
Mr Bailey warned that the recent financial market turmoil triggered by pension funds using liability driven investments showed regulators needed to be more vigilant about risks "blow[ing] up in the non-banking world".
The collapse of cryptocurrency exchange FTX also showed the potential for "systemic" risks stemming from cryptocurrencies, he said.
Mr Bailey said many schoolchildren in particular were interested in trading cryptocurrencies. He said: "Our view generally is that [crypto] is not currently large enough to be systemic, but it has the potential to be so", adding that regulators were doing "a lot of work" on at a global level to ensure any future turbulence in the market does not trigger a financial crisis.
Read Wednesday’s business news updates below as they happened.
Simon Foy reports on the latest about the European Central Bank…
The Eurozone is facing multiple threats to its financial stability, the European Central Bank (ECB) has warned, as a recession looms and inflation continues to surge.
The central bank said that banks, governments and households are all at risk as the economic outlook darkens. The cost of living crisis is hurting people’s ability to service debts, while Europe’s worsening growth prospects threaten corporate profits. 
It also warned about dangers to public finances as governments borrow to lessen the impact of the energy crisis, house price growth begins to stall and stock markets slide.  
In its twice-yearly financial stability report, the central bank added: “All of these vulnerabilities could unfold simultaneously, potentially reinforcing one another.” 
Elon Musk has told a Delaware court that he wants to find somebody else to run Twitter as he juggles the chief executive posts at four different companies.
Musk made the remarks while testifying in a Delaware court to defend against claims that his $56bn pay package at electric carmaker Tesla was signed off by a compliant board of directors, Reuters reported.
"There’s an initial burst of activity needed post-acquisition to reorganize the company," Musk said. "But then I expect to reduce my time at Twitter."
Earlier today my colleague Matthew Field reported internal emails from Twitter suggesting Musk has told staff there to embrace an "extremely hardcore" working culture – or quit by 5pm on Thursday.
Musk is chief of Tesla, SpaceX and tunnel-building business The Boring Company as well as Twitter.
Amazon has begun laying off some of its staff, following reports this week that the online shopping-cum-web hosting empire is preparing to make 10,000 redundancies.
A note from Dave Limp, chief of Amazon’s Devices and Services division which makes products such as the Alexa smart speaker, said: "After a deep set of reviews, we recently decided to consolidate some teams and programs. One of the consequences of these decisions is that some roles will no longer be required."
Affected staff were told yesterday, said Limp.
Amazon’s share price climbed 1.5pc in the minutes after the memo, which was published on Amazon’s website, became public knowledge.
The job cuts come on the heels of Twitter shedding 3,700 staff at the beginning of November and Mark Zuckerberg sacking 11,000 workers from Facebook and Instagram owner Meta, around 13pc of its workforce.
More from the Bank of England’s governor, as relayed by Szu Ping Chan:
Andrew Bailey says policymakers will have to "work hard to rebuild the UK’s reputation" in the wake of former Chancellor Kwasi Kwarteng’s mini-budget because it damaged Britain’s standing in the world.
This has stuck even as the UK’s borrowing costs have fallen after the bulk of the £45bn package of unfunded tax cuts were reversed.
Our reputation "has taken a knock" among our international peers, adds Bailey.
Our economics editor Szu Ping Chan reports the latest from Parliament’s Treasury Committee, where Bank of England governor Andrew Bailey is being grilled by MPs:
Andrew Bailey says several indicators suggest the housing market is already slowing down. He says the fact that prices are rising faster than wages and a looming recession will also have an impact on housing in the near term.
Mr Bailey adds that the buy-to-let property market shrank more than he expected. This could be the result of higher taxes introduced by the government which means many landlords "don’t want to be bothered" with owning a property portfolio any more.
MPC member Catherine Mann adds that there is a question of whether buy-to-let landlords will pass their higher mortgage costs on to tenants when they remortgage.
Good afternoon all, this is Gareth Corfield taking over today’s business live blog from Chris Price.
Elon Musk has told Twitter staff to embrace an "extremely hardcore" working culture or leave the company by Thursday.
My colleague Matthew Field has more:
In a midnight email to workers, the Tesla billionaire set out his vision for “Twitter 2.0”, saying that to “succeed in an increasingly competitive world, we will need to be extremely hardcore.”
"This will mean working long hours at high intensity," he wrote. "Only exceptional performance will constitute a passing grade."
The billionaire attached a form to his email asking staff to accept a new employment contract, adding: "Anyone who has not done so by 5pm ET tomorrow will receive three months severance."
The Tesla and SpaceX chief executive is known for his own punishing work routine, which at one stage included living in a Tesla factory and sleeping on the factory floor. He has already cancelled Twitter’s working from home policy and ended its free lunches since taking over in a $44bn (£37bn) buyout in October.
Read how the ultimatum to staff could prompt a further flood of exits at Twitter.
Ben Broadbent, the Bank’s deputy governor, says the two-year recession for the UK that the Bank has predicted, which would be the longest on record, could "easily" be shorter or longer depending on how the economy evolves. 
My colleague Szu Ping Chan has the details:
The economic decline is expected to be shallower than the financial crisis, but far longer.
Mr Broadbent warns that recessions are "regressive", meaning the less well paid are more likely to lose their jobs, with some of the cost of living pain "inescapable" because it is being driven by a spike in energy prices.
Andrew Bailey, the Bank’s governor, adds that inflation is hitting the poorest in society the most. 
He says the Bank’s economists have calculated that some of the richest households in Britain are currently seeing inflation rates of around 10.5pc (compared with the 11.1pc headline rate) – while some of the poorest households are seeing inflation of 11.9pc.
Catherine Mann, a member of the Bank of England’s monetary policy committee, is also giving evidence to MPs alongside Mr Bailey.
She said the issue of people leaving Britain’s workforce, which is forcing employers to offer higher wages, potentially stoking inflation, "is a puzzle".
She said higher wages "tend to bring people back to work" and questioned if people are not in the labour force and not working "how are they managing?"
Andrew Bailey is giving evidence to MPs on the day that it has emerged inflation hit 11.1pc in October.
Asked whether the Bank of England had been slow to respond to rising inflation, the Governor said it had been hard to foresee the series of shocks that have hit the UK economy. 
He said there was a supply chain shock in the recovery from Covid, the shock of the Russian invasion of Ukraine and the domestic shock of "tightness in the UK labour market".
He said it was "very hard" to have predicted those events a year ago.

The Bank of England governor said he will not take a pay rise if he is offered one on the day that it emerged inflation across the UK hit 11.1pc in October.
Mr Bailey said he would "politely decline" if he was offered a pay increase, as he has done in the past.
His base rate of pay was £495,000 last year.
In February, he was criticised for urging workers not to ask for pay increases as the Bank began efforts to tackle runaway inflation.
This week, Rishi Sunak urged UK bosses to rein in bonuses as his government battles to keep a lid on inflation.
Meanwhile, Jeremy Hunt told the House of Commons on Tuesday that “if we give inflation-busting pay awards to people who may deserve them and may be working extremely hard, that would just fuel further inflation”.
Elon Musk, known for his combative testimony, has arrived at a Delaware court to defend against claims that his $56bn £47bn) Tesla pay package was based on easy to achieve performance targets and influence with the board of directors.
Tesla shareholder Richard Tornetta sued Musk and the board in 2018 and hopes to prove that Musk used his dominance over the electric vehicle maker’s board to dictate terms of the package, which did not require him to work at Tesla full-time.
Musk’s testimony before Chancellor Kathaleen McCormick comes as he is struggling to oversee a chaotic overhaul of Twitter, the social media platform he was forced to buy for $44bn in a separate legal battle before the same judge after trying to back out of that deal.
Musk, the world’s richest person, tweeted this week that he was remaining at Twitter’s San Francisco headquarters around the clock until he fixed the company’s problems.
Britain’s worsening cost-of-living crunch has led to a sharp rise in the number of shoppers looking for "reduced to clear" food, Tesco has said.
Britain’s biggest supermarket group said Britons are struggling with rising living costs that show no sign of easing. 
A YouGov survey it commissioned showed that 69pc of shoppers now look out for products which have been marked down because they are close to their expiry date or are end of season or discontinued lines.
It said 33pc of customers are seeking these reductions more frequently.
Meat products were proving most popular in the reduced to clear section followed by ready meals, vegetables and then desserts.
Tesco is revamping the reduced section in its stores to "Reduced in price – just as nice," to tempt the 29pc of people the YouGov survey found would shop reduced items more often if the section was made more visually appealing.
Tesco said the trend was also helping it to cut food waste.
Estée Lauder beat the owner of Gucci to buy fashion house Tom Ford in a £2.4bn deal, the luxury cosmetics company has announced.
It is the biggest acquisition to date for the US beauty firm, which won the deal over Gucci owner Kering SA.
Estée Lauder already licenses Tom Ford cosmetics and fragrances. Ford will stay as creative director until 2023.
Making money from your savings has rarely been so tough. Inflation now stands at 11.1pc while the best easy-access cash savings rate stands at just 2.85pc.
Investing remains the only way for savers to keep their money in line with inflation – or even beat it.
Melissa Lawford reveals how to make money with inflation at 11.1pc.
Railway workers have voted to continue taking industrial action in their long-running dispute over pay, jobs and conditions.
The Rail, Maritime and Transport union (RMT) said a fresh ballot of its members showed overwhelming support to carry on with action.
Under employment law, the union had to re-ballot its members six months after a previous vote.
It means RMT members in Network Rail and at 14 train operating companies will be able to take strike action for potentially another six-month period.
RMT general secretary Mick Lynch said: "This union is determined to continue with this campaign until the employers understand that they need to respond to our members’ aspirations on job security, pay and working conditions."
Crypto lending business Genesis has stopped customers making early repayments on loans, or taking out new ones, after facing what it called "abnormal withdrawal requests".
The suspension of redemptions by the brokerage comes as fears of contagion spread through the crypto industry following the collapse of the FTX exchange.
The withdrawal requests exceeded the amount of liquidity – the money it has in its coffers – of Genesis Global Capital, the brokerage’s lending arm.
Chief executive Derar Islim said he had hired advisers to explore possible options, including raising new funding.
However, he insisted Genesis’ spot and derivatives trading "remain fully operational", as does its custody business.
The price of crypto assets like Bitcoin has suffered amid a crisis of confidence in the digital asset industry since FTX filed for bankruptcy on Friday.
The maker of Budweiser and Stella Artois is seeking to buy back $3.5bn (£2.9bn) of bonds in a move aimed at reducing its large debt pile.
AB InBev wants to reduce its debt since it took on a loan to fund its takeover of SAB Miller, the maker of Fosters and Miller. 
Its net debt stood at $76bn (£63.8bn) at the end of June.
Companies are trying to reduce their debt burdens as rising interest rates send borrowing costs soaring.
Jaguar Land Rover’s chief executive Thierry Bollore is to resign from the luxury carmaker due to "personal reasons".
The Frenchman, who led Renault during an eight year spell at the company, quits after just two years at the British car giant.
Adrian Mardell will take over as interim chief executive. 
Mardell has been part of Jaguar Land Rover for 32 years and is a member of its executive board.
Mr Bollore’s resignation will be effective from Dec 31.
SSE shares edged down after the power generator said its major wind farm development would be delayed by months until the summer.
SSE fell as much as 1.9pc after the announcement of the delay to the Seagreen development, which is set to be the world’s largest offshore wind farm. 
The company still posted an expected set of bumper profits from ballooning energy prices, just a day before the government is set to expand a windfall tax on the industry. 
The UK power generator’s profits only heighten the spotlight on utilities seen as capitalizing on higher wholesale prices after Russia’s invasion of Ukraine. 
SSE’s adjusted pre-tax profit jumped 221pc to £559m in the six months to the end of September, largely driven by higher revenue from its gas-fired plants. 
Delays in the construction of Seagreen, which is now expected to be operational in the summer instead of April, cost the company £57m.
The cost of living crisis facing households may be reaching its peak, according to some economists.
Paul Dales, chief UK economist at Capital Economics, said it is possible the 11.1pc inflation figure for October will mark the peak.
However, he warned this depends on whether the energy price guarantee ends in April, if core inflation remains high and if food prices continue to rise.
The latter of those three will probably decline next year according to the boss of America’s largest private company. 
David MacLennan, chief executive of Cargill, said this would happen even as global crop stockpiles stay very tight, especially for oilseeds.
Talks are currently taking place to extend the grain deal brokered by the UN in Turkey that allows wheat to be exported through Ukraine’s Black Sea ports.
The hacker who raided Sam Bankman-Fried’s collapsed crypto exchange FTX is now one of the world’s biggest holders of the token Ether.
A wallet linked with the incident swapped about $49m of stablecoins – mainly Dai – for Ether on Tuesday, security specialists PeckShield said. 
That lifts the attacker’s Ether haul to 228,523 or about $288m (£242m), which is the 35th largest stash of the coin, according to data from analytics platform Etherscan.
The insult of the theft from FTX added to the injury of the company’s chaotic tumble into bankruptcy last week. 
There may now be more than one million creditors wondering if they will get their money back from the platform.
British Land suffered a 3pc fall in the value of its properties across its portfolio as increasing rents failed to offset the impact of interest rate increases.
Shares in the UK real estate investment trust were down 1.9pc after it said its valuation of its retail and logistics properties dropped 3.6pc.
Meanwhile its "campuses" – clusters of offices, shops and restaurant properties like Broadgate in London – declined 2.7pc in the six months to September. 
That was despite estimated rental values increasing in almost all parts of the portfolio. 
Britain’s commercial landlords are contending with rising interest rates, which are starting to feed into property yields, causing values to fall.
London house prices fell by £3,206 between August and September – showing the property market was turning even before the blow caused by the mini-Budget disaster.
Melissa Lawford has the latest:
House price growth slowed to 9.5pc in September, down from 13.1pc in August as rising mortgage rates hammered affordability.
House prices in the South East also dipped by £751 month-on-month. 
The West Midlands, East Midlands and Yorkshire and the Humber also recorded marginal drops. 
National house prices remained flat between August and September.
The data covers sales that were agreed several months earlier and so reflects the jump in mortgage rates before the mini-Budget.
In the private rental sector, prices paid by tenants in the UK increased by 3.8pc in the year to October, representing the largest annual percentage change since this data series began in January 2016.
Cash savers are seeing their wealth eroded by almost £2,000 a year as inflation soars ahead of interest rates.
Saving rates lag far behind the rate of inflation, with the average easy-access Isa paying just 1.37pc, according to the analyst Moneyfacts. 
With inflation at 11.1pc, this means a saver with the average Isa balance of £22,000 is losing £1,927 a year in real terms, or £161 a month. This is despite earning £301 in interest.
Use our calculator to find out how your savings have been affected:
My colleague Lauren Almeida reveals how savers can secure more competitive rates.
Deliveroo is withdrawing from Australia, cutting 120 jobs and leaving 15,000 freelance riders seeking new work.
Senior Technology Reporter Matthew Field has the details:
Will Shu’s food delivery company, which launched in Australia in 2015, said the business would not be able to reach "sustainable and profitable scale" without significant investment. 
It added its Australia business had been placed into voluntary administration and would be wound down. Deliveroo said it would provide "appropriate compensation packages" for its creditors, including severage packages for employees and "compensation" for riders.  
Eric French, Deliveroo’s chief operating officer, said: "This was a difficult decision and not one we have taken lightly. We want to thank all our employees, consumers, riders and restaurant and grocery partners who have been involved with the Australian operations over the past seven years."

Deliveroo, which is listed on the London Stock Exchange, has withdrawn from several markets as it pursues profitability. It had previously pulled back from Germany, the Netherlands, Spain and Taiwan.
The company said Australia accounted for around 3pc of global sales on its food delivery app, but had dragged on its profits. 

Giles Thorne, an analyst at Jefferies, said: "Deliveroo exiting Australia is the latest in a long line of market rationalisation across the sector as it responds to the closing of capital markets in 2022."
Andrew Bailey will give evidence to MPs later where he will outline how the Bank of England plans to get a grip on runaway inflation.
The scale of the challenge facing him, and householders, was laid bare by data from the Office for National Statistics.
This graph shows how the cost of everyday necessities have surged over the last year:
Hit video app TikTok is investing heavily to address US concerns about its data security.
Shou Zi Chew, the chief executive of the China-based social media platform, said the company is working on an effort, called Project Texas, that will isolate sensitive data from its American users so that only staff in the US will have access.
 He called the effort "extremely difficult and expensive to build," and said it was aimed at the concerns of American officials.
TikTok has come under fire because employees in China, where parent ByteDance is based, have been able to tap into US user data. 
The surge in inflation to 11.7pc has left many business owners "being hit in the tills and in their own pockets".
Dr Jackie Mulligan, an expert on the Government’s High Streets Task Force, warned the current level of inflation "has taken a sledgehammer to millions of small independent businesses".
The founder of the local shopping platform Shopappy said:
Their costs are going up at the same time that their sales are coming down. 
Millions of small businesses are in an unimaginably difficult place, financially and emotionally. 
The terrifying level of inflation in particular is a double whammy for the small family businesses that line the UK’s high streets. 
They’re being hit in the tills and in their own pockets at the exact same time. 
We have businesses on our platform who are facing a 500pc increase in their energy bills and operating with no clarity on the support mechanisms currently in place, let alone after April. 
It’s a savage time to be a small independent retailer.
Mr Kipling and Bisto owner Premier Foods has said its sales grew in the first half of the year, as more consumers are opting to stay in rather than eat out.
Its revenues went up by 6.2pc in the half year to October 1 to £419m, from £394m a year ago.
And the group’s adjusted pre-tax profits swelled by more than a tenth, from £42m last year to £47m this year.
The food firm said it had managed to cushion the impact of cost inflation, which has pushed up food and drinks prices significantly, by making cost savings and increasing its prices.
But cake and gravy lovers face an annual price increase in the fourth quarter of the year, which the group expects to further make up for inflated costs.
One of the largest and longest-standing resident’s of London’s Canary Wharf is moving out of the east London financial district and into the City of London.
Law firm Clifford Chance has signed a lease to rent a 321,100 sq ft office development at 2 Aldermanbury Square.
The deal with Great Portland Estates will be the biggest letting in the landlord’s history and see the law firm take on the whole building.
It will leave its Canary Wharf home, where it has been since 2003, once the new net carbon zero offices are completed in December 2025.
Sage saw shares jump as much as 6.1pc in early trading as analysts predicted soaring revenues.
Morgan Stanley said the software maker’s annualised recurring revenue, a key indicator repeat organic sales, would hit 12pc for the year.
The FTSE 100 remained up by 0.3pc in early trading, standing at 7,390.17.
Oil and gas stocks have risen 1.2pc on the back of higher crude prices.
Defence stocks including BAE Systems jumped 2.7pc following the blast in Poland that killed two people near the Ukrainian border. Russia denied it was responsible.
The FTSE 100 has opened up 0.3pc at 7,391.95 despite the news of the gloomy inflation picture.
City economists said inflation is likely to have peaked but warned it will depend on the Chancellor’s decision on the future of energy support, writes Tom Rees.
Paul Dales, chief UK economist at Capital Economics, said the "inflation battle is not yet won" even if inflation has peaked.
He said prices will depend on government energy support, food inflation and the "stubbornness of core inflation", adding:
The recent falls in global agricultural commodity prices suggest to us that food inflation will soon start to ease.
There is growing evidence that the upward pressure on core inflation from global factors is now fading.
Britain’s rate of inflation is the second-worst in the G7 behind only Italy, where the consumer prices index is at 11.9pc.
Germany is grappling with year-on-year inflation of 10.4pc, the US inflation rate stands at 7.7pc, Canada is running at 6.9pc, France is at 6.2pc, while in Japan it stands at 3.5pc.
UK inflation hit 11.1% in October and sits at the higher end of the range for G7 countries pic.twitter.com/a2sJuTFa3p
 
Chancellor Jeremy Hunt blamed the "aftershock of Covid and Putin’s invasion of Ukraine" for the fresh spike in inflation, warning that high prices are a hindrance to long-term growth.
He said tighter fiscal policy can help bring down inflation as he draws up plans to raise taxes and slash spending to shore up the public finances. Mr Hunt said: 
It is our duty to help the Bank of England in their mission to return inflation to target by acting responsibly with the nation’s finances. 
That requires some tough but necessary decisions on tax and spending to help balance the books.
The bulk of the rise in inflation was due to a 24.3pc leap in utility prices from September to October after the energy price cap was increased from £1,971 to £2,500 on October 1.
However, without the Government’s energy price guarantee keeping the cap at £2,500, things would have been much worse.
The ONS estimated that without the guarantee, electricity, gas and other fuels prices would have risen by nearly 75pc between September and October.
The soaring cost of dairy products, eggs and energy boosted inflation to a fresh four-decade high in October despite government help to slash bills.
Senior economics reporter Tom Rees has a summary of the inflation data:
Prices rose by 11.1pc last month as the cost of living crisis deepened for households, up from an increase of 10.1pc the previous month, according to the Office for National Statistics.
It was the highest rate of inflation since 1981, while living costs were up 2pc compared to the previous month.
The latest increase was driven by the biggest surge in grocery bills since the late 1970s and higher energy costs even after the Government introduced a £2,500 cap on average gas and electricity prices. Food prices rose by 16.5pc year-on-year after an enormous jump in the price of milk, cheese, pasta, eggs and oils.
The cost of housing and household services is at its worst since 1975, even beating modelling estimates stretching back to the 1950s.
Household bills rose 11.7pc in the year to October, up from 9.3pc the previous month. 
This annual increase is the highest on record, with the highest previous estimate standing at 11.4pc in 1975. 
Households are paying, on average, 88.9pc more for their electricity, gas, and other fuels than they were paying a year ago.
The pound erased its gains after the news inflation had hit 11.1pc in the year to October.
It had risen as much as 0.3pc to more than $1.19 but has tumbled down 0.1pc to stand at over $1.18.
Inflation is now five times higher than the Bank of England’s 2pc target.
The central bank has increased interest rates for eight consecutive months, including its highest increase in 30 years of 0.75 percentage points.
Interest rates stand at 3pc, its highest in 14 years.
Investors are betting that the base rate will rise by another half a point next month to 3.5pc.
Office for National Statistics chief economist Grant Fitzner laid the blame for rising inflation squarely on energy. He said:
Rising gas and electricity prices drove headline inflation to its highest level for over 40 years, despite the Energy Price Guarantee.
Over the past year, gas prices have climbed nearly 130pc, while electricity has risen by around 66pc.
Increases across a range of food items also pushed up inflation.
These were partially offset by motor fuels, where average petrol prices fell on the month, while the price for diesel rose, taking the disparity in price between the two fuels to the highest on record.
There was further evidence that costs facing businesses are rising more slowly, driven by crude oil and petroleum prices.
The soaring cost of dairy products, pasta, and energy boosted inflation to a fresh four-decade high in October despite government help to slash bills.
Prices rose by 11.1pc last month as the cost of living crisis deepened for households, up from an increase of 10.1pc the previous month, according to the Office for National Statistics.
It was the highest rate of inflation since 1981, while living costs were up 2pc compared to the previous month.
The latest increase was driven by the biggest surge in grocery bills since the late 1970s and higher energy costs even after the Government introduced a £2,500 cap on average gas and electricity prices. 
Food prices rose by 16.5pc year-on-year after an enormous jump in the price of milk, cheese, pasta, eggs and oils. Low-fat milk was up 48pc, cheese rose 27pc and pasta and couscous climbed 34pc.
The consumer prices index measure of inflation had reached 10.1pc last month, having returned to its previous high set in July after unexpectedly dipping to 9.9pc in August.
The latest increase in the year to October will hit consumers as they prepare for the Chancellor’s Autumn Statement on Thursday.
Jeremy Hunt has warned that "we’re going to be asking everyone to contribute more".
Rising inflation will also put pressure on the Bank of England to continue raising interest rates when it meets on Dec 15, following its 0.75 percentage point rise to 3pc earlier this month, hitting its highest level in 14 years.
Gas and electricity prices were the biggest factor. This graph shows how inflation has surged in the last two years:
Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 9.6% in the 12 months to Oct 2022, up from 8.8% in Sept.

CPI rose by 11.1%, up from 10.1%.

These increases were driven by gas and electricity prices.

➡️ https://t.co/xlVI9UpAdp pic.twitter.com/5Viqzc65zR
The cost of living crisis has deepened for households as inflation has surged to 11.1pc.
The rise was ahead of economists’ forecasts of about 10.7pc and shows consumers are already facing a squeeze ahead of the Chancellor’s Autumn Statement tomorrow. 
1) Jeremy Hunt is preparing to announce measures to help the long-term sick back into jobs. The Chancellor is expected to use Thursday’s Autumn Statement to warn that labour shortages are fuelling inflation. 
2) Cornwall is set to win approval for first UK spaceport,  clearing a key hurdle in the way of the maiden satellite launch from the British Isles.
3) Virgin Atlantic drops gender-neutral uniforms on England’s World Cup flight to Qatar. Male staff will not be allowed to wear dresses, on safety grounds
4) More than 1 million people may have lost money from the collapse of cryptocurrency exchange FTX, bankruptcy filings have revealed.
5) Jeremy Hunt’s business tax raid will leave UK shareholders worse off than the French
Asian stocks dropped and the dollar gained after Ukraine and Polish authorities said a blast that killed two people in Poland was caused by a Russian-made missile. 
Worries over a potential ratcheting up of geopolitical tensions spurred a drop of 1pc in MSCI’s broadest index of Asia-Pacific shares outside Japan.
Australian shares fell 0.4pc, while Japan’s Nikkei stock index dropped 0.1pc.
US president Joe Biden has since said the missile was probably not fired from Russia.
Hong Kong’s Hang Seng Index shed 1.1pc and China’s CSI 300 fell 0.4oc by the midday break.
The struggling property sector weighed on the markets, with China’s new home prices falling at their fastest pace in more than seven years in October, weighed down by Covid 19-related curbs and industry-wide problems.
We rely on advertising to help fund our award-winning journalism.
We urge you to turn off your ad blocker for The Telegraph website so that you can continue to access our quality content in the future.
Thank you for your support.
Need help?
Visit our adblocking instructions page.

source

Leave a Reply

%d bloggers like this: