LONDON — Inflation in September jumped to its highest level in five years, as Brexit continues to push up the cost of living in the UK.
The UK’s Consumer Prices Index (CPI) inflation rate — the key measure of inflation — was 3% in September, up from 2.9% in the previous month, according to the Office for National Statistics.
September’s figure marks the first time since April 2012 that prices have increased by 3% or more.
CPI measures the weighted average of prices of a basket of goods and services, such as food, transportation, and medical care.
CPIH, a measure which includes costs associated with maintaining a home — and which the ONS cites as a more useful indicator of living costs than CPI — was 2.8% in the month, up from 2.7% in August
The chart below illustrates the sharp rise in inflation following last year’s Brexit vote. OOH represents owner occupiers’ housing costs, which measures the cost of owning, maintaining, and living in one’s own home:
The sharp fall in the value of the pound following the UK’s vote to leave the EU last year has raised the cost of imports and pushed up the rate of inflation. Most major forecasters believe that inflation’s peak is likely to be somewhere around the 3% mark it reached in September.
Inflation’s impact on the British economy is being exacerbated by the fact that real wages are actually growing more slowly than prices are rising, meaning that the average Brit is actually seeing the amount of money they have to spend decrease.
The ONS’ latest wage growth numbers will be released on Wednesday, helping to create a fuller picture of just how intense the squeeze on Britain’s consumers is right now.
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