UK inflation has accelerated to 11.1pc. It’s being driven by rising energy and food prices, according to the latest figures from the ONS. This is a new 41-year high. That’s way more than expected The consensus among economists was that the Consumer Price Index for October would rise to 10.7pc.
The higher number will increase pressure on the Bank of England to further hike interest rates at its next meeting. Food price inflation rose to 16.5pc on an annual basis and that’s the highest rate for 45 years.
So, we’re all utterly ****ed? Well, no, not really. Core inflation, which strips out food and energy, held steady at 6.5pc. As Randstad UK boss Victoria Short pointed out, “Average weekly earnings rose at an annual rate of 5.7% during the three months to September as more workers secured better deals to help navigate the cost of living crisis and firms moved to retain and attract staff.”
While pay is going up, when adjusted for inflation, real wages are still falling. But the gap between wages and core inflation is not quite as wide as it looks.
Here’s my worry. While unemployment is still near a 50-year low, it is beginning to rise. As Short put it, “The massive labour shortages we have seen over the last two years are set to start easing as the recession bites.” At the moment, if you are really struggling, you can try renogotiatiing your salary. You can go for a new job with a new employer. You can get a second job, possibly via the gig economy. If you’re in the public sector, you could strike.
But most of those options won’t be around forever. From the point of view of the Cost of Living Crisis, the bad news has barely started.