London The sharpest rise in food prices since 1980 fueled UK inflation last month. Goods and services rose in September by 10.1 percent compared to the same month last year, as the statistics office announced on Wednesday in London.
The 40-year high already marked in July was thus reached again. In August, the inflation rate had eased to 9.9 percent. Economists polled by Reuters had only expected an increase to 10.0 percent. The British pound crumbles after the announcement of the inflation data: The national currency lost 0.2 percent to 1.1301 dollars.
Along with energy, food and non-alcoholic beverage prices were a strong driver of inflation in September. They increased by 14.5 percent compared to the same month of the previous year and thus more than at any time since April 1980. “Today’s release underscores the risk that underlying inflation will remain strong even as the economy weakens,” said economist Paul Dales of consultancy Capital Economics.
The British central bank is trying to break the wave of inflation in Great Britain by raising interest rates. At the same time, as a further tightening measure, the Bank of England plans to start actively reducing its government bond holdings, which currently amount to £838 billion (equivalent to EUR 963.7 billion). Initially, October 6th was set as the starting date for the sale of bonds, before the turbulence on the market thwarted the monetary authorities’ plans.
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The central bank had to stabilize the situation on the market with temporary emergency purchases of bonds. Previously, Prime Minister Liz Truss’ economic and tax plans had led to a dramatic loss of confidence among investors who had doubts about the viability of the debt-financed financial plan initially considered. Truss has admitted mistakes in her economic concept, but is sticking to her position.
More: Bank of England: No decision made to postpone bond sales