\n Inflation is expected to increase to its highest level for 21 months as more pressure piles on the Chancellor and the Bank of England.\n<\/p>\n
\n Economists have predicted that Consumer Prices Index (CPI) inflation will have hit 4% in September, when the Office for National Statistics (ONS) reveals its latest data on Wednesday.\n<\/p>\n
\n It would mark the highest level since January 2024.\n<\/p>\n
\n Inflation struck 3.8% in July and August amid pressure from rising food prices, as firms highlighted increased tax and labour costs.\n<\/p>\n
\n Economists at Pantheon Macroeconomics predicted that higher motor fuel and air fare prices would help drive inflation to 4% in September.\n<\/p>\n
\n It also pointed towards \u201cstrong clothes prices\u201d for the month, but indicated this could be offset by \u201cslightly softer\u201d services price inflation.\n<\/p>\n
\n Economists have also suggested there could be a contribution from increased private school fees.\n<\/p>\n
\n Some schools were expected to increase fees from the start of the new school year as they staggered higher costs for parents after the Government introduced a 20% VAT rate for private school fees at the start of the year.\n<\/p>\n
\n September\u2019s predicted jump in inflation could represent a peak in the rising cost of living for UK households.\n<\/p>\n
\n The Bank of England previously forecast that inflation would peak at around 4% in September before steadily falling.\n<\/p>\n
\n Pantheon Macroeconomics\u2019 Rob Wood has said he expects inflation to \u201cslow only slightly\u201d in the following months, dipping to 3.8% by the end of the year.\n<\/p>\n
\n Other economists have been more optimistic, with Investec suggesting it expects the rate to have peaked at 3.9% in September before falling.\n<\/p>\n
\n Any increase would still highlight a challenging economic backdrop for the Bank of England as it seeks to bring inflation down to its 2% target rate.\n<\/p>\n
\n On Friday, the Bank\u2019s top economist Huw Pill urged other rate-setters to be \u201cmore cautious\u201d about future cuts due to concerns that inflation could stay stubbornly high.\n<\/p>\n
\n Another rise in inflation could also be a major concern for Chancellor Rachel Reeves, a month ahead of her autumn Budget.\n<\/p>\n
\n The September inflation rate is typically used to decide the level of increase for many benefits, such as universal credit, tax credits and disability benefits.\n<\/p>\n
\n This rate is also a key part of the Pension Triple Lock, which is used to decide how much pensions will increase by in the following April.\n<\/p>\n
\n However, the increase is based on either this inflation rate, average earnings growth between May and July, or 2.5%.\n<\/p>\n
\n Given earnings growth was confirmed as 4.8%, the inflation rate will only be used if there is a shock acceleration beyond this level.\n<\/p>\n
\n A rise in inflation in September could result in higher-than-expected spending when the Chancellor is already looking to fill a black hole in the state finances.\n<\/p>\n
\n However, higher inflation would also contribute to a higher tax take, with the September rate also typically used to calculate some annual tax increases such as for business rates.<\/p>\n","protected":false},"excerpt":{"rendered":"Inflation is expected to increase to its highest level for 21 months as more pressure piles on the…\n","protected":false},"author":2,"featured_media":211688,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":{"0":"post-211687","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom","12":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/211687","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=211687"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/211687\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/211688"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=211687"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=211687"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=211687"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}