Consumers are feeling a fresh squeeze on living costs after figures yesterday revealed a shock jump in the UK’s annual inflation rate to 2.7 per cent.
The bigger-than-expected leap in the Consumer Prices Index (CPI) was described by one City economist as a “nasty surprise” and came just a month after inflation fell back to a near three-year low of 2.2 per cent in September.
A near trebling in university tuition fees and steeper food prices were blamed for the increase, which was the biggest month-on-month jump in a year.
The figures from the Office for National Statistics (ONS) put pressure on the Bank of England, which is due to publish its latest growth and inflation forecasts tomorrow. It had previously predicted CPI would fall back to the Government’s 2 per cent target by the end of the year.
The ONS said the biggest factor pushing up CPI was the Government’s widely protested move to lift the tuition fees cap to £9,000 from £3,375 a year ago, which saw education costs rise by 19.1 per cent last month – the largest increase since records began.
Sharp increases in the cost of food were also behind the rise after this summer’s record wet weather left the UK with its worst potato and carrot harvest in living memory, the ONS said.
With several energy bill increases still to take effect, some experts now predict inflation will reach 3 per cent by January and could hit 3.5 per cent by the middle of 2013.