UK inflation hits 41-year high as UK prepares strict budget

Rising household energy bills and food prices have led to the british inflation to a maximum of 41 years, according to data published one day before the Economy Minister, Jeremy Huntannounce “tough but necessary” tax hikes and spending cuts to control prices.

Consumer prices rose 11.1% in the 12 months to October, the biggest rise since October 1981 and a big jump from 10.1% in September, the Office for National Statistics said on Wednesday.

Economists taking part in a Reuters poll – many of whom think inflation is probably peaking right now – had expected inflation to rise to 10.7 percent.

Inflation would have risen to around 13.8% in October had the government not intervened to limit the price of household energy bills to 2,500 pounds (about $2,960) a year on average, the ONS said.

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Responding to the data, Hunt – who is due to present a new budget on Thursday – said there will be “tough but necessary” decisions to deal with rising prices.

It is our duty to assist the Bank of England in its mission to bring inflation back to target by acting responsibly with the nation’s finances,” he said in a statement.

Analysts said the jump kept pressure on the bank of england to keep raising interest rates, but the austerity scale to be announced on Thursday could mean borrowing costs have to rise less.

Ellie Henderson, an economist at Investec, noted that “the UK is in a rather unique situation where the government is planning a broad program of measures to help balance its books.”

“The scale of the proposed fiscal tightening will certainly drag down economic growth and as such should bring inflation down with it, opening the door for the Bank of England to tighten monetary policy at a less aggressive pace.”