UK’s international reputation damaged by mini-budget, says BoE governor; high inflation hits poorest hardest – as it happened

Last modified: 06: 35 PM GMT+0

Andrew Bailey says UK must tread carefully after recent turmoil as he faces Treasury committee, on day inflation accelerates to a 41-year high of 11.1%, hurting poor the most

Joules has formally fallen into administration

PS: While Andrew Bailey and colleagues were testifying, another UK firm collapsed into administation.

Fashion firm Joules has formally fallen into administration, putting the future of the retailer’s 132 shops and 1,600 workers at risk.

It said on Monday that it filed a notice to appoint administrators after failing to secure emergency funding.

The company has now hired administrators from Interpath Advisory.

Joules, which is best known for its jackets and patterned wellington boots, had been struggling for months with falling sales. It has in part blamed those woes on the cost of living crisis and on the UK summer heatwave, which reduced demand for its posh winter wellies

The administrators said the business will continue to trade while they “assess options for the business, including exploring the possibility of a sale as a going concern”.

Closing post

BoE's Bailey sees no systemic threat from FTX

The collapse of crypto exchange FTX does not appear to pose a systemic threat to financial stability, Bank of England governor Andrew Bailey says.

Asked about the cryptocurrency crisis, at the end of the session, Bailey tells the Treasury committee that:

“I don’t ... detect what I would call a systemic fallout from FTX.”

“Its activity in the UK as far as I am aware is not very substantial.

Bailey explains that the Financial Stability Board, an international body, is working very actively on crypto regulation.

Bailey also reveals that he often gets asked about crypto when he visits schools.

And he reminds MPs that he had warned the public for years that crypto assets which were not backed by real assets had no intrinsic value.

A class action lawsuit has been launched against FTX’s former chief executive Sam Bankman-Fried over the crypto exchange’s collapse which also names as defendants a host of its celebrity backers including Larry David, Naomi Osaka, Gisele Bündchen and Shaquille O’Neal.

Andrew Bailey also explains that the movements in the UK bond market after the mini-budget were ‘unprecedented’ in modern times.

And the whole package was a surprise, he adds, as the Bank didn’t have any advance warning (as flagged here.)

UK's international reputation damaged by mini-budget turmoil, says Bailey

The UK’s international reputation has been damaged by the mini-budget introduced by Liz Truss and Kwasi Kwarteng, Andrew Bailey warns.

The BoE governor tells the Treasury committee that:

“We have damaged our reputation internationally, because of what happened”

Bailey points out that he was at the IMF annual meeting in Washington which took place shortly after the mini-budget (which Kwarteng returned early from, to be fired), so he knows the impact.

People were saying “we didn’t think the UK would do this”, Bailey says.

The governor adds that fixing this damage won’t be as easy as simply bringing government borrowing costs back into line (as the Bank achieved, though its pledge to buy long-dated bonds to rescue the pension system).

UK, US and eurozone long-dated bond yields
UK, US and eurozone long-dated bond yields Photograph: Bank of England

Bailey says:

It will take longer to rebuild that reputation than it will to correct the gilt curve.

We have to tread carefully.

Forceful comments from Bailey just now: UK international reputation has been damaged, government efforts to be able to overrule financial regulation rulings won't help this

— David Milliken (@david_milliken) November 16, 2022

BoE governor Andrew Bailey tells MPs on Treasury Committee the mini-Budget damaged the UK's "reputation internationally".

"People were saying we didn't think the UK would do this," he says.

"It will longer to rebuild that reputation than it will be to correct the gilt curve".

— Ashley Cowburn (@ashcowburn) November 16, 2022


Bank of England governor Andrew Bailey has told the Treasury committee he does not support the government’s plan to introduce controversial “call-in powers” allowing them to intervene in financial regulation.

I am concerned by it, Bailey tells MPs.

He points out that the UK system works with a well-established division of responsibilities.

Namely,… parliament legislates, the chancellor tells the Bank how it interprets its remit for price stability, regulators operate the regime, and MPs hold the regulators such as the Bank to account.

To be competitive, the UK needs an effective legal system and effective regulatory system, he explains, adding:

We must not threaten that.

Last week, the bosses of the UK’s City watchdog also voiced concerns, saying its independence and international reputation could be undermined if ministers could overrule decisions they didn’t like.

Andrew Bailey tells MPs that the Bank didn’t know what was in September’s mini-budget before it was announced.

And even if it had known, it would have been at a disadvantage as there was no analysis from the Office for Budget Responsibility.

On the housing market, Bailey says that indicators are showing a weakening in price growth and sales volumes.

The buy-to-let property sector has shrunk more than he expected, the governor adds.

He also suggests that the spike in mortgage rates, following the mini-budget, is now reversing as the UK ‘risk premium’ fades.

There are more mortgage offers coming on to the market, and we are beginning to see mortgage rates come down.

Baldwin asks Andrew Bailey how much of the impact on mortgage costs is down to the mini budget, and how much due to rising BOE base rate.

Bailey says the mini budget impact was "a fairly short lived thing... ours is a longer run effect"

— Richard Partington (@RJPartington) November 16, 2022

Baldwin: "We can send all our grumpy constituents about their increased mortgage rates in your direction now can we governor?"

— Richard Partington (@RJPartington) November 16, 2022

Q: Are we at peak inflation?

It will depend in part on what happens when the government’s energy price guarantee ends in April, the committee hears.

Andrw Bailey says that food is a key thing to watch – after food prices jumped by over 16% in the year to October.

UK 'definitely underperforming' on trade since Brexit

Q: Do you agree with Michael Saunders, a former MPC member, that without Brexit we wouldn’t face an austerity budget this week?

Andrew Bailey says the Bank thinks Brexit will cause a long-term downshift to UK productivity of around 3%. It calculated that shortly after the referendum, and hasn’t seen anything yet to change its view.

There is an effect from Brexit – but Michael must take his own view, Bailey adds.

“He’s a liberated man now,” points out Labour MP Rushanara Ali.

Bailey laughingly replies that “You said it” (perhaps remembering that he is not so liberated).

As a public official, Bailey says, he must remain neutral on Brexit, but not neutral when it comes to the effect of Brexit.

And he then slips the question to Swati Dhingra, the trade expert on the MPC, who tells MPs that UK trade has been underperforming since Brexit.

Dhingra tells the Treasury committee:

It’s undeniable now that we’re seeing much, much bigger slowdown in trade in the UK compared to the rest of the world.”

“There’s also the services exports side ... there again, we’re seeing a really strong stagnation.

We’re definitely performing below trend in terms of the exports numbers, in terms of the imports [it’s] even probably a bit bigger than that.”

MPC member Swati Dhingra says there is a 6% Brexit effect in the price of UK food compared to the rest of the world.

On UK trade - she says "We’re definitely underperforming compared to our peers"

— Richard Partington (@RJPartington) November 16, 2022

Dhingra was referring to this work here from researchers at the LSE:

— Richard Partington (@RJPartington) November 16, 2022

Dhingra explains that in the period after the referendum, the huge depreciation in the pound pushed up prices, and reduced wages.

And we are now seeing that UK is “definitely underperforming” on trade, both in terms of shipments to the EU, and to the rest of the world.

UK economy 'dramatically lagging' eurozone and US

Q: Is the UK’s economic outlook more troubling than for other countries, and if so why?

Andrew Bailey points the committee towards the UK’s performance since the pandemic began, which is “not a good story”,

The UK is still 0.7% smaller than at the end of 2019, the Bank of England governor says, while the euro area is 2.1% higher than its pre-pandemic levels, and the US economy is 4.2% bigger.

Andrew Bailey compares G7 economy growth since 2019, post-Covid
🇬🇧 -0.7%
🇪🇺 +2.1%
🇺🇸 +4.2%

— Paul Kelso (@pkelso) November 16, 2022

Q: What caused that dramatic difference?

Several factors, Bailey replies. The US, for example, has seen much more fiscal stimulus, and the UK labour force is tighter.

Deputy governor Ben Broadbent points out that the UK and Europe have suffered a much bigger blow from rising gas prices.

Catherine Mann puts her finger on another issue – the UK’s weak labour force participation, which is a “dramatic outlier” to other advanced economies.

This is a puzzle, she says – you’d expect higher wages to have brought people back into the jobs market. If not, how are they managing to cope with high inflation?

[One factor, though, is the huge rise in people unable to work due to ill health.

There are now 2.5 million people out of work due to long-term illness – partly due to long Covid, and also likely due to record long NHS waiting lists which have prevented people getting well enough to work.

Half a million additional people have dropped out of the workforce because of long term illness since 2019. This is a huge increase. Long Covid may account for less than a fifth of these disabled people, and younger people have seen some of the larger increases. According…

— Robert Peston (@Peston) November 15, 2022

to the @ONS one cause may be record long NHS waiting times for treatment. But there is a mystery around why sickness has reduced the labour force quite so much. It is a serious worry for the individuals, and it has made life much more difficult for employers - while ratcheting…

— Robert Peston (@Peston) November 15, 2022

up inflation. There are now 2.5m people who are unavailable to work because of long term sickness. This is a massive number of people.

— Robert Peston (@Peston) November 15, 2022

Attached are charts biggest increases in reported medical reasons for withdrawing from the Labour market because of long term illness. They are “other” (probably long Covid), “mental illness and nervous disorders” and “problems connected with back or neck”

— Robert Peston (@Peston) November 15, 2022

Swati Dhingra adds that she opposed this month’s 75 basis-point rise in Bank rate, because it is clear that UK growth is already negative.

Dhingra is a trade economist, so understands that the terms of trade shock will make the UK poorer – through lower profits and lower wages, or through higher prices.

And if rates continue to rise, the UK risks a longer, deeper recession. So Dhingra voted for a smaller, 50 basis-point rise, due to the “risks of over-tightening”.

Another policymaker, Silvana Tenreyro, voted for just a quarter-point rise, but the other seven MPC members felt a three-quarter point rise was necessary.

Younger workers will also suffer long-term damage from the recession, warns Swati Dhingra, the newest member of the Monetary Policy committee.

Dhingra tells MPs that people who enter the labour market in a recessionary environment end up with “perpetually lower wages”.

In contrast, points out Catherine Mann, top earners don’t spend their full salaries so have a bank of savings to dip into to help them though the recessionary and inflationary shock.

Poor will suffer most in recession

Q: Who will suffer most from the recession?

Historically, recessions are regressive, points out deputy governor Ben Broadbent, which means poorer people will be worst hit by the downturn.

He tells the Treasury committee:

It is the less well-paid who are most likely to lose jobs in a downturn.

And of course, the huge rise in import prices are in areas which form a larger part of the consumption basket for less well off people – energy and food.

We saw evidence of that this morning – with the Office for National Statistics showing that poorer households are suffering the highest inflation rate (details here)

The inflation gap between high- and low-income households is the largest since March 2009.

CPIH annual inflation was 10.5% for low-income households and 9.1% for high-income households in the year to October 2022 – a gap of 1.4 percentage points.


— Office for National Statistics (ONS) (@ONS) November 16, 2022

This morning’s producer price inflation data showed that imported food prices are up 30% year-on-year, Broadbent points out.

“What we buy from abroad costs a lot more. And that makes us poorer,” says MPC member Catherine Mann.

Monetary policy can’t offset that, she adds.

Q: Given the uncertainty in the economy, can we avoid a recession?

Bailey explains that that Bank believes GDP would fall by 3%, ‘peak to trough’, if it was to raise interest rates to over 5% as the markets had expected last month (they don’t any more, though).

But if rates remained at their current 3%, GDP would only drop by 2%.

Bailey says that “any recession is a bad recession”, but these aren’t deep by historic standards.

[In the first case, though, the Bank has predicted the recession would last for eight quarters, the longest recession in a century]

The good news - if interest rates don't rise as high as markets expect & stay at 3% the Bank of England projects a shallower recession (red line vs blue line).

The bad news - even *that* would leave the level of UK GDP *still* below its peak this year in Autumn *2025* 👇

— Ben Chu (@BenChu_) November 3, 2022

Monetary Policy Committee member Ben Broadbent suggests the recession could be longer, or shorter, than those forecasts.

“So, I would not stand squarely behind the length and say this will definitely happen, it could easily turn out to be a little bit shorter or a little bit longer.


Bailey: further interest rate rises likely

Andrew Bailey goes on to tell MPs that Britain’s very tight labour market means further interest rate increases are likely.

He says:

“It is still a very tight labour market, as yesterday’s labour market statistics demonstrated.”

Those statistics showed that total wages (including bonuses) have jumped by 6% in the last year – very strong by historical standards, but obviously more than eaten up by inflation.

Bailey: UK risk premium lower, but not zero

Q: Why did the Bank warn that interest rates were unlikely rise as high as the markets expected, when you raised rates to 3% this month?

Andrew Bailey tells the Treasury committee that it was rare for the Bank to push back against market expectations, but it was justified this time as there was a “UK risk premium built into the markets”.

That premium was “too high”, and not consistent with the Bank’s assessment of the situation, Bailey says.

He’s referring to the surge in UK borrowing costs after the mini-budget (dubbed a moron risk premium, rather brutally, by City experts).

Q: What is the UK risk premium today?

It’s hard to say, Bailey replies. He suspects that most of the premium has now fallen out, as gilt yields have fallen, but it’s “probably not back to zero”.

[The market reaction to tomorrow’s autumn statement will give us a clue on this too].

Bank governor says he'll turn down any pay rise

Harriett Baldwin turns to the labour market:

Q: Isn’t it clear that we’re in a wage-price spiral now? There’s a lot of wage pressure out there, so how much will the Bank raise pay by?

Governor Andrew Bailey says the Bank hasn’t settled its pay offer to staff yet.

Total pay in the economy is rising by 6%, he says, but the Bank isn’t planning to raise pay that much.

He points out that many firms are turning to one-off payments, rather than permanent pay rises, and also directing their resources to lower-paid staff.

That, he says, will be part of the Bank’s approach, Bailey says:

We want to ensure our lower-paid staff get a larger share of the pay pot we are offering this year. That is the fair way to do it.

Q: Will you be taking a pay rise, governor?

Bailey says he won’t. If he’s offered one, he’ll “politely decline” as he did in previous years.

According to the Bank’s annual report, Bailey received a base salary of £495,000 for 2021-2022, plus a £99,000 payment in lieu of pension.

Given Bailey’s comments this year that workers should not seek large pay rises to avoid fuelling inflation, I think he’s wise to turn down any pay rise – it would trigger immense criticism….


Harriett Baldwin MP turns to Catherine Mann, an external member of the Monetary Policy Committee, as a witness for the prosecution that the Bank was too slow to raise rates.

Q : You have called for a higher bank rate than your colleagues four times – are you happy with what the governor says?

Mann, who has been a hawkish member of the rate-setting MPC, says she has voted for higher interest rates due to data showing price expectations have risen.

Also, by ‘front-loading’ interest rate rises, you have a better chance of controlling inflation, Mann says.

But she does agree that the inflationary shock of rising energy and goods prices are dominating the inflation numbers. But what the Bank cares about is whether they become ‘embedded’.

Mann also points out that the Bank has taken an aggressive approach – raising rates to 3%, from just 0.25% at the start of the year, in response to rising prices and nominal wages.

Q: So would inflation be lower now, if the rest of the committee had agreed with you and raised rates faster?

Mann says the ‘general view’ is that more of these inflationary shocks have become embedded into wages and prices, leading to higher wage and price expectations.

Research shows that more forceful action earlier on would potentially have had a superior outcome on inflation, she adds.

Bailey defends Bank's record on interest rates

Harriett Baldwin, the new chair of the Treasury committee, begins the session by asking Andrew Bailey for his response to inflation hitting 11.1% this morning.

Q: Your goal is 2% – so what’s gone wrong with your forecast modelling?

The Bank of England governor says the economy was hit by a huge shock by the pandemic two years ago. It was right that monetary policy responded to that shock.

Since then, the economy has suffered a series of supply shocks – which have reduced its supply capacity compared to demand.

He points to the global supply chain shock in the recovery from Covid, which now appears to be easing.

Then there was “the big one”, Russia’s invasion of Ukraine, which had a very big impact on energy prices, and food inflation.

Thirdly, the tightness of the UK labour force – which has shrunk compared to its pre-Covid size.

The UK is the only OECD country showing this pattern of a labour force shock, Bailey points out.

Defending the Bank’s record, Bailey says it was very hard to predict the Ukraine war a year ago. It also wasn’t clear a year ago that ending the furlough scheme would not push up unemployment (most economists thought it would).

Q: So there’s nothing wrong with your models?

Bailey says that “with the benefit of hindsight” , there are things the Bank could have done differently…

Q: But putting Ukraine aside, didn’t you miscalculate the risks from furlough?

Baldwin is referring to the Bank’s decision not to start raising interest rates until December 2021.

Bailey insists that the UK economy has faced a series of shocks.

Q: But surely you recognise that having very, very loose monetary policy, and very very loose fiscal policy created risks that inflation would take hold, creating a wage-price spiral.

Bailey says that the Bank would have had to raise interest rates at the height of the pandemic – because it takes time for monetary policy to transmit to the real economy.

I don’t think that is a reasonable thing to have done, based on what we knew at the time.

Watch MPs quiz Andrew Bailey over inflation

Over in parliament, the Treasury Committee are about to question the Bank of England governor, Andrew Bailey, over inflation and interest rate policy.

He’ll be accompanied by deputy governor Ben Broadbent, and external Monetary Policy Committee members Dr Swati Dhingra and Dr Catherine Mann.

The committee say they’re likely to scrutinise the reasons for this month’s three-quarter point rise in interest rates, and its previous decisions on interest rates and quantitative easing

MPs may also examine the Bank’s communications around the rate rise, and in particular the Governor’s prediction that the Bank rate is likely to peak lower than that currently priced into financial markets.

The Committee is likely to discuss the future path of inflation and the UK’s economic outlook.

Cash-strapped Britons target 'reduced to clear' food, says Tesco

Britain’s worsening cost-of-living crunch has led to a sharp rise in the number of shoppers looking for “reduced to clear” food, Tesco says (via Reuters)

Britons are struggling with rising living costs that show no sign of easing. With inflation at a 41-year high of 11.1% and consumer confidence close to the gloomiest on record, they are seeking to make savings.

Tesco, Britain’s biggest supermarket group, said a YouGov survey it commissioned showed that 69% of shoppers now look out for products which have been marked down because they are close to their expiry date or are end of season or discontinued lines.

It said 33% of customers are seeking these reductions more frequently.

Meat products were proving most popular in the reduced to clear section followed by ready meals, vegetables and then desserts.

Tesco is revamping the reduced section in its stores to “Reduced in price - just as nice,” to tempt the 29% of people the YouGov survey found would shop reduced items more often if the section was made more visually appealing.

Tesco said the trend was also helping it to cut food waste.

🟡 Big 4 grocer @Tesco is rebranding its "reduced to clear" section allowing better visibility for customers looking to save money on items

Read more:

— Grocery Gazette (@GazetteGrocery) November 16, 2022

Axios: Blackstone CEO says he won't back Trump in 2024

Over in the US, the founder of investment manager Blackstone has revealed he won’t back Donald Trump’s bid to win the presidency.

Instead, Stephen Schwarzman argues the Republican should choose a leader from the ‘new generation’….(at a time when support for youthful Florida governor Ron DeSantis is rising.)

Reuters has the story:

Blackstone Group founder Stephen Schwarzman, who was among Wall Street’s biggest contributors to Donald Trump’s 2020 re-election campaign, said he will not back Trump in 2024, Axios reported on Wednesday.

The former president announced he will run in the 2024 U.S. presidential election on Tuesday.

Schwarzman said it was time for new party leadership and that he would back a different Republican in the presidential contest, Axios said, citing a statement from the chairman and chief executive of the private equity group.

“It is time for the Republican Party to turn to a new generation of leaders and I intend to support one of them in the presidential primaries,” he said.

Schwarzman was a top donor leading up to last week’s midterm election, spending $35.5 million to support Republicans. Republicans are one seat short of capturing control of the U.S. House of Representatives but failed to take over the U.S. Senate, and most of Trump’s endorsed candidates lost their races.

“America does better when its leaders are rooted in today and tomorrow, not today and yesterday,” Schwarzman wrote, according to Axios.

It begins: Steve Schwartzman, CEO and chairman of Blackstone, makes public that he won’t be with Trump

— Maggie Haberman (@maggieNYT) November 16, 2022

Schwarzman isn’t alone in declining to jump on board the Trump re-election train. According to reports, Rupert Murdoch has warned Trump his media empire will not back any attempt to return to the White House, as former supporters turn to DeSantis.

Full story: UK inflation jumps to 11.1% on back of energy and food price rises

The UK’s annual inflation rate hit a 41-year-high of 11.1% last month even as help was provided to households by the introduction of the government’s energy price guarantee.

Dearer food also contributed to a 2% jump in prices in October alone, helping to push the increase in the cost of living over the previous 12 months to a level not seen since October 1981.


The Office for National Statistics (ONS) said households were paying 90% more for gas, electricity and other fuels than they were a year earlier. Food price inflation rose from 14.6% to 16.4% – its highest level since 1977.


A rise in inflation had been anticipated by the City but the rise in the annual rate from 10.1% in September was markedly steeper than the 10.7% figure economists had forecast and was an unwelcome piece of news for Jeremy Hunt before Thursday’s autumn statement.

Responding to the figures, the chancellor said:

“We cannot have long-term, sustainable growth with high inflation. Tomorrow I will set out a plan to get debt falling, deliver stability, and drive down inflation while protecting the most vulnerable.”

Here’s the full story:

Analysis: More pain to come for vulnerable households

Households can expect to face continued pain for some time from high inflation, even though there are hopes that the surge in prices may have peaked.

Our economics correspondent Richard Partington explains:

Although the fall in energy prices in wholesale markets should feed through to consumer prices, they still remain significantly higher than before the crisis began. As a result, the Bank of England expects inflation to tick above 10% for several months before falling again.

That means the Bank is likely to launch another sharp rise in interest rates next month, adding to the pressure on borrowers. Despite the prospects of a prolonged recession, Threadneedle Street argues it is duty bound to get inflation back down to its target rate of 2%.

This backdrop of high inflation and a weaker economic outlook will make for some difficult choices for Jeremy Hunt at Thursday’s autumn statement. After the latest figures, the chancellor was clear that getting inflation down was a key priority to stabilise the economy, alongside his aim of balancing the books after the disaster of Truss’s mini-budget.

“This insidious tax is eating into pay cheques, household budgets and savings, while thwarting any chance of long-term economic growth,” he said. “We cannot have long-term, sustainable growth with high inflation.”

However, the big danger is that drastic action to cut government borrowing through tax rises and spending cuts could choke off the economy, while further ripping up the tattered welfare state at a time when families need it most.

Here’s his full analysis of the UK inflation report:

Underlying inflation highest in the North, says NIESR

NIESR, the think tank, fears that inflation may remain in double-digit levels for months.

It has also calculated that underlying inflation is higher in the North than the South East – which echoes the Centre for Cities research this morning that inflation is higher in Burnley, Glasgow and Blackpool.

Our latest #NIESRCPI Tracker suggests that underlying #inflation in the North of England was the highest at 9.5 per cent, while the South East had the lowest rate at 8.4 per cent in October

You can read our analysis in full here⬇️#UKeconomy#EconTwitter

— National Institute of Economic and Social Research (@NIESRorg) November 16, 2022

Paula Bejarano Carbo, associate economist at NIESR, explains:

“Annual CPI inflation increased to 11.1% in October from 10.1% in September. This contribution to the headline figure was almost entirely driven by energy, which saw high price increases despite the government’s Energy Price Guarantee. Food prices have also seen a steep increase - this is particularly worrying as there is no support for households to deal with this surging cost.

Our measure of underlying inflation increased to a new series high of 8.8% in October from 8.3% in September, suggesting that inflation continues to be more persistent and broad-based.

We expect annual CPI inflation to remain around 11% into the first quarter of 2023.”

Broadgate Circle in London
Broadgate Circle in London Photograph: Bloomberg/Getty Images

British Land, one of Britain’s biggest property developers, has said that higher interest rates and the worsening economic outlook have hit the value of its offices and shops.

The FTES 100 listed company said the value of its portfolio dropped by 3% and posted an after-tax loss of £34m for the six months to 30 September, against a profit of £370m a year earlier. It owns three major office and retail campuses across London – Broadgate in the City, Paddington Central and Regents Place – and is building a fourth at Canada Water in east London.

Simon Carter, the chief executive, said with the rise of hybrid working during the pandemic, “people need less space, but better quality space,” adding that there isn’t much of that available at the moment.

The trend is towards “big floor plates” because “business like to get all their staff on one floor for better collaboration,” or divide them into smaller flexible work space units for smaller firms.

British Land is the UK’s biggest operator of retail parks, which are 98% full. Carter thinks they will weather the recession much better than high streets where vacancy rates are “20-odd %” because retail parks attract discount supermarkets like Aldi and Lidl and other value retailers, as rents are cheaper.

We are focused on three strategic themes, targeting areas which play best to our skill set and where we see the most attractive opportunities to drive returns. Find out more about our approach here: #BLHY2023

— British Land PLC (@BritishLandPLC) November 16, 2022

He said retailers want stores in retail parks because they are “easy for customers to get to” as long as there is good parking, and can offer easy click & collect.

Carter explained:

With many weaker brands having already exited the market pre pandemic, today’s more successful retailers have typically established more resilient business models which include an effective omni channel strategy. These businesses are performing well and are selectively taking space, particularly on retail parks.

They include more general retailers such as Marks & Spencer and Next and specialists such as Lush, Rituals and Pandora. As consumers see their disposable incomes squeezed with rising energy and mortgage costs, customers are turning to value retailers such as Lidl, Aldi and B&M who are outperforming as a result.

British Land reports a 3% fall in the value of its properties as increasing rents fail to offset the impact of interest rate hikes

— Bloomberg (@business) November 16, 2022

British Land has also invested £1.5bn in warehouses across London following the online shopping boom during the pandemic (although that has slowed), and expects warehouse rents to grow by 4% to 5% in future.


The UK’s cost of living crisis is now a full-blown emergency, warns Rachelle Earwaker. senior economist at the Joseph Rowntree Foundation.

As flagged earlier, the huge rise in food prices and higher energy bills means the poorest households suffer the highest inflation rate.

Some people are forced to eat out-of-date food, and turning off their fridges to save power (endangering their health), and pawning items to pay for energy, Earwaker points out:

New inflation figures out this morning for October - and it's the highest rate in over 40 years - with CPI at 11.1%. Driven mainly by food, transport and energy prices, its hitting everyone's budgets, but it is decimating budgets for those on the lowest incomes. Small 🧵here: 1/x

— rachelle_earwaker (@r_earwaker) November 16, 2022

Food prices rose 16.2% between October 2021 and October 2022. 16.2%! These are HUGE increases - and food insecurity in the UK is at terrifying levels already. Back in May, we found that 5.2m low income households had cut down on meals or gone hungry. Food bank use has soared. 2/x

— rachelle_earwaker (@r_earwaker) November 16, 2022

Yesterday, the Food Standards Agency reported that people across the country are eating food past its use-by date, turning off their fridges and freezers and eating cold food: all because they can’t afford to cook and store fresh food. It is terrifying and heartbreaking. 3/x

— rachelle_earwaker (@r_earwaker) November 16, 2022

Housing, water and energy use is up 26.6%. This is despite the lower price through the energy price cap, but absolutely reflects that energy prices have soared since the new price cap rise in October. 4/x

— rachelle_earwaker (@r_earwaker) November 16, 2022

Another big cost for low income households is transport - which has come down slightly from big highs this year, but still up 8.9% on October last year. We know that some households have been cutting back on essential journeys already. 5/x

— rachelle_earwaker (@r_earwaker) November 16, 2022

The numbers are big (and bigger for those on lowest incomes at 11.9% CPI ) but its the impact of price rises where incomes aren't enough to meet bills & food & transport that is the most important part of the story. Everyday atm is bringing new stories of families struggling 6/x

— rachelle_earwaker (@r_earwaker) November 16, 2022

Parents are pawning items to get £10 in the electricity meter, homeless charities are providing showers for those with homes who can't afford to run their showers. This is beyond a crisis - it's an emergency that is so crucial to get fixed. 7/x

— rachelle_earwaker (@r_earwaker) November 16, 2022

In tomorrow's budget, the govt must at least commit to uprating benefits in line with inflation & bring it forward so that those on the lowest incomes can survive the winter. April is too late for more support. It's needed now so families can afford to eat, shower & stay warm 8/x

— rachelle_earwaker (@r_earwaker) November 16, 2022

How the Guardian covered soaring inflation in 1981

At 11.1%, the UK inflation rate is the highest since the early days of Margaret Thatcher’s administration.

Back in 1981, chancellor Geoffrey Howe was struggling to hit his inflation target, as prices rose by double-digit rates and workers pushed for large pay rises to keep up with prices (plus ça change, plus c’est la même chose, eh?)

My colleague Jason Rodrigues has looked into the archives, and reports:

Our story from December 1981: ‘Government inflation hopes deflated,’ told of successive months of rate rises that the conservative chancellor Geoffrey Howe had to endure.

The article cites another method of measuring inflation, the retail prices index, and that its increase was driven mainly by higher drinks and food prices.

The news of rising inflation was a blow to Margaret Thatcher’s chancellor who was already struggling to get a grip of pay rises.

The Guardian’s coverage of inflation in 1981

Rising core inflation means the Bank of England won’t pause its interest rate rises, with another hike expected in December, says economist Samuel Tombs of Pantheon.

Damn it - there's still no sign of a slowing in the pace of core price rises that would enable the MPC to pause its rate hiking cycle. The 0.7% m/m rise in the core CPI exceeded its average October increase in the 2010s by 0.5pp. That's a bigger overshoot than in prior months:

— Samuel Tombs (@samueltombs) November 16, 2022


October’s surge in inflation to 11.1% was “probably the peak”, predicts Paul Hollingsworth, chief European economist at BNP Paribas:

While the experience in other regions tells us to be humble when trying to call the precise peak in inflation, we think that there is a good chance this proves to be it for the UK.

For one thing, core goods inflation slowed, and the improvement in supply bottlenecks (see our tracker here) and a softening in demand should mean this continues.

Note that producer input and output price inflation both slowed in October (see 7.34am post).

Risks to financial stability can affect us all in one way or another. Right now these risks are rising, so if you read one thing today, make it the overview/key messages of the @ecb's latest Financial Stability Review

— Katie Ranger 🇪🇺🇺🇦 (@katieranger_) November 16, 2022

Risks to financial stability in the euro area have risen

Over in the eurozone, the European Central Bank has sounded the alarm that risks to economic stability are rising as the economic outlook darkens and officials battle record inflation.

In its latest financial stability report, the ECB says lenders, governments and households are all vulnerable.

The ECB says:

“Risks to financial stability in the euro area have increased amid soaring energy prices, elevated inflation and low economic growth.

“All of these vulnerabilities could unfold simultaneously, potentially reinforcing one another.”

The ECB is concerned that borrowers will struggle to repay their loans as inflation eats into their incomes.

Plus, governments have limited scope for fiscal measures to support their economies, having already built up high levels of government debt.

Risks to financial stability in the euro area have risen, with people and firms feeling the effects of higher inflation and a weaker economic outlook.

Our Financial Stability Review looks at how the financial system is faring in these difficult times 1/3

— European Central Bank (@ecb) November 16, 2022

Inflation and high energy bills are hurting people, lowering their spending power and making it harder to repay loans.

But the scope for governments to do more to soften this impact is limited, given their high debt levels after the pandemic and the rising cost of funding 2/3

— European Central Bank (@ecb) November 16, 2022

Market uncertainty around inflation and interest rates has increased the risk of asset prices changing in an abrupt or disorderly way.

Less liquidity in key markets may also make it harder for investors to adjust their portfolios or raise funds 3/3

— European Central Bank (@ecb) November 16, 2022

The ECB is also conerned about the recent volatility in energy markets, which has affected the derivative markets which energy sector firms use to manage risk.

UK rents jump

UK rents are continuing to climb, at the fastest pace in at least six years.

Private rental prices paid by tenants in the UK rose by 3.8% in the 12 months to October, the Office for National Statistics reports, up from 3.7% in September.

That’s the largest annual percentage change since the ONS started collecting the data in January 2016, adding to the cost of living squeeze on tenants.

ONS says rents are rising at the fastest rate since it began collecting data on them (which was 2006 for English data, 2016 for UK as a whole).
Up 3.6% over past yr in UK, 3.7% in Eng.
A reminder that it is not just those with mortgages being squeezed right now - far from it.

— Ed Conway (@EdConwaySky) November 16, 2022

The East Midlands saw the highest annual percentage change in private rental prices (4.8%), while London saw the lowest (3.0%).

Private rental prices paid by tenants in the UK rose by 3.8% in the 12 months to Oct 2022.

This was up from 3.7% in Sept 2022.


— Office for National Statistics (ONS) (@ONS) November 16, 2022


UK think tank Centre for Cities has calculated that there is a clear North-South divide when it comes to inflation.

Towns and cities in the North of England, and in Scotland, have seen the largest increase in the cost of living – this tweet has the details:

📢📢As of October 2022, the top🔟cities with the highest inflation rates are:

Burnley 13.0%
Glasgow 12.6%
Blackpool 12.6%
Bradford 12.5%
Dundee 12.4%
Blackburn 12.4%
Hull 12.3%
Leicester 12.2%
Stoke 12.1%
Doncaster 12.1%#CostOfLivingCrisis #inflation

— Centre for Cities (@CentreforCities) November 16, 2022

💥 Just in from @CentreforCities

Towns & cities in England, Scotland and Wales with the highest rate of inflation in October:

Burnley: 13.0%
Glasglow: 12.6%
Blackpool: 12.6%
Bradford: 12.5%
Dundee: 12.4%
UK: 11.1%
London (lowest): 10.8%

— Andy Bruce (@BruceReuters) November 16, 2022

You can check out your area’s inflation rate, here.

House prices stalled in September

House price inflation slowed in September with prices unchanged during the month, another sign that the economy has cooled.

The Office for National Statistics reports that UK average house prices increased by 9.5% over the year to September 2022, down from 13.1% in August 2022.

The annual percentage change fell partly because UK house prices rose sharply in September 2021, when people were rushing to take advantage of the pandemic stamp duty tax break.

But UK house prices were flat in September, at £295,000, some £26,000 higher than this time last year.

Andy Sommerville, director at property data firm Search Acumen, predicts demand will likely decline further as the UK enters a period of recession and high inflation.

“Today’s data is further evidence of a turning tide for house prices, reflecting the same pattern of declining growth we have started to see emerge over the last two months.

As the impacts of previous rate rises and inflation filter through into house prices over coming months, we’d expect to see further declines coming down the tracks.

Average house prices increased by 9.6% in England (to £314,000), by 12.9% in Wales (to £224,000), by 7.3% in Scotland (to £192,000) and by 10.7% in Northern Ireland (to £176,000).

Despite AVG house prices inc 9.5% over the year. AVG house prices in Sep 2022 plateaued at £295,000, £26,000 higher than this time last year.
Wales saw the biggest inc at 12.9% followed by Northern Ireland at 10.7%, England at 9.6% & Scotland at 7.3% @ONS

— Emma Fildes (@emmafildes) November 16, 2022

Sunak: inflation is the enemy we must face down

British Prime Minister Rishi Sunak arriving to hold a press conference today.
British Prime Minister Rishi Sunak arriving to hold a press conference today. Photograph: Leon Neal/Getty Images

Prime minister Rishi Sunak has promised his government will get to grips with inflation, our deputy political editor Jessica Elgot reports.

Speaking at the G20 summit in Bali, Indonesia, Sunak calling inflation ‘the enemy’, and the top worry facing households as they are hit by rising bills and higher mortgage costs.

He said:

“My absolute number one priority is making sure that we deal with the economic situation that we face at home. With more news of inflation today it’s the number one thing that’s on people’s minds, it’s the thing that’s causing most anxiety. Opening up bills, emails come in with rising prices, and that’s why it’s right that we grip it”

“People’s number one anxiety at the moment is the rising cost of living, it’s inflation… The chancellor rightly described it as insidious, it makes people poorer, that’s what inflation does. And it’s the enemy that we need to face down.

I want to make sure that we do that and we do it as quickly as possible. I want to limit the increase in mortgage rates because that’s also causing anxiety for millions of homeowners across the UK.

And given that we’re facing these global economic shocks, we are going to have to take some difficult decisions at home to protect ourselves against those and to start getting a grip on inflation.”

We’re off from Bali now - but Sunak flying back to an investigation into Dominic Raab and a painful autumn statement tomorrow…

— Jessica Elgot (@jessicaelgot) November 16, 2022


Food producers urge UK to cut the cost of trade with the EU

The Food and Drink Federation has called on the government to cut the cost of trading with European Union, to help bring down food inflation from its 45-year high of 16.4%

Chief Executive Karen Betts says trade problems, along with soaring input costs, are to blame for the soaring prices we’ve seen today (details here):

“Manufacturers continue to do what they can to contain price rises for shoppers, and we are very conscious of their impact on low income households in particular. But on average manufacturers have seen a 21% rise in their costs over the past year, with the high cost of energy particularly significant. This has meant that some costs are having to be passed onto consumers.

Government could help ease these pressures by reducing the costs of doing business, for example through simplifying regulation, reducing the cost of trade with the EU, and helping companies to invest in growth, innovation and skills through tax incentives. To that end, we’re looking forward to seeing what measures the Chancellor will set out in his Autumn Statement tomorrow.”

As UK food + drink inflation hits 16.4% (highest since 1977), @Foodanddrinkfed says Govt shd help manufacturers by simplifying regulation and by "reducing the cost of trade with the EU".

In other words, Johnson's botched Brexit deal ain't helping.

— Paul Waugh (@paulwaugh) November 16, 2022

Some economists are hopeful that UK inflation may have peaked, as demand will fall as the country enters recession.

Jeremy Batstone-Carr, European strategist at wealth manager Raymond James, predicts tomorrow’s Autumn Statement could help to stem the inflationary tide, by slashing spending and hiking taxes.

It is expected that tomorrow we will see significant fiscal tightening, which will have a marked effect on economic activity, driving down demand and helping to rein in inflation.

It will come as a relief to the Bank of England that fiscal policy is now playing its part in the battle to control inflation, and as such the pressure on the Bank to keep hiking rates will likely ease in the months ahead.”

Paul Dales of Capital Economics points out, though, that core inflation (ignoring food and energy) may keep rising:

It’s possible that the big leap in CPI inflation from 10.1% in September to a new 40-year high of 11.1% in October will mark the peak. But core inflation may yet rise further, which is why we think the Bank of England will need to raise interest rates higher to bring inflation back to the 2% target.

TUC: Britain’s cost of living emergency gets worse by the day.

Family budgets are being shredded as the cost of food and energy skyrockets, warns TUC general secretary Frances O’Grady:

She says Britain’s cost of living emergency is getting worse by the day, and urges Jeremy Hunt to lift welfare payments in line with inflation [ie, by 10.1%, September’s CPI reading].

“The government must stop playing games and uprate pensions and benefits in line with inflation.

“But we need more than sticking plaster fixes. Unless we get pay rising across the economy we’ll keep lurching from crisis to crisis.

“We can’t be a country where nurses and teaching assistants are having to use foodbanks to get by.

“If ministers continue to hold down wages in the public sector millions of key workers will face years more of hardship.”

Some stats behind the rising cost of shopping …

— Mark Simpson (@BBCMarkSimpson) November 16, 2022

New TUC analysis published today reveals that nurses face a £1,500 real wage cut if the government pushes ahead with plans for 2% public sector pay rises.

October’s high CPI inflation rate increases the pressure on chancellor Jeremy Hunt to maintain the energy price support scheme, argues Kitty Ussher, chief economist at the Institute of Directors.

“October’s high inflation rate was anticipated, but it is still sobering to see the scale of the impact of high electricity and gas prices on domestic heating bills. Even with the introduction of the household Energy Price Guarantee, the price of household fuels rose by 25% on the month. Without the scheme, the increase in fuel bills would have been 75% in a single month giving an overall CPI inflation rate of 13.8%.

“Continued rises in food costs, particularly dairy, also contributed to October’s high inflation rate, although this was partially offset by a falling contribution from transport – both petrol prices and the cost of second hand cars.

“With the protective effect of the Energy Price Guarantee so apparent in the data, the Chancellor will now be under even greater pressure to maintain the scheme into the foreseeable future.”

The surge in electricity and gas prices following the war in Ukraine will cause real pain to households this winter, but it’s a boost to the power companies.

UK renewable power generator SSE has reported a more than tripling of profits thanks to soaring energy prices.

The company, which is based in Perth, Scotland, and runs gas-fired power stations alongside hydroelectric plants and windfarms, reported a 221% increase in adjusted pre-tax profits year on year to £559m in the six months to the end of September.

These bumper earnings come a day before Jeremy Hunt is forecast to announce a 40% windfall tax on “excess returns” being made by electricity generators.

How milk, cheese, pasta, bread, meat, butter prices all soared

The prices of many essential food items have jumped at an alarming pace, which will have badly hit poorer families who are least protected from inflation.

Low-fat milk has soared by 48% since last October, for example, a shocking increase. Cheese costs 27% more than a year ago.

Pasta prices have jumped by 34%, bread is up 14.4%, fish costs almost 16% more, eggs are up 22% (and in shorter supply due to avian flu)

Meat prices have risen 15.7%, including a 19.7% jump in the cost of chicken, with pork up 18%.

Butter costs almost 30% more than last year, while olive oil is up 28%. Margarine and other vegetable fats cost 42% more, due to the Ukraine war disrupting sunflower exports.

Getting your family their five-a-day is more expensive too, with fruit prices up 10.3% and vegetables rising 15.1%.

Buying sweet tweets will also leave a sour taste, as well as an emptier wallet or purse – chocolate is up 8.6%, with ice cream and edible ices up 13.1%.

Reuters’ Andy Bruce has a full breakdown:

Food & drink, annual CPI price increases:
🥛 48%
🍝 34%
🧈 30%
🥚 22%
🍯 22%
🥔 20%
🍗 20%
🥩 18%
🎣 16%
🧃 15%
🍞 14%
🍦 13%
🍕 12%
☕️ 12%
🍎 10%
🍚 10%
🍫 9%

— Andy Bruce (@BruceReuters) November 16, 2022

As flagged earlier, this all drove food and drink inflation to the highest since 1977.

Alcoholic drinks also rose, but by less – with wine rising 2.7%, and beer up 5.4%.

Here’s a breakdown of the price changes that pushed inflation to a 41-year high of 11.1%:

  • Food and non-alcoholic beverages: +16.2%

  • Alcoholic beverages and tobacco: +6.1%

  • Clothing and footwear: +8.5%

  • Housing, water, electricity, gas and other fuels: +26.6%

  • Furniture, household equipment and maintenance: +10.5%

  • Health: +4.2%

  • Transport: +8.9%

  • Communication: +3.2%

  • Recreation and culture: +5.8%

  • Education: +3.2%

  • Restaurants and hotels: +9.6%

  • Miscellaneous goods and services: +5.1%

RPI inflation soars to 14.2%

The retail prices index measure of inflation also surged higher in October, to 14.2%.

Although RPI is no longer an official national statistic, it is used to set many contracts – and also the interest rate on index-linked UK debt. So the bill for servicing Britain’s national debt has just gone up.

Unions also use RPI as the basis for pay negotiations, to protect workers from the cost of living.

Inflation hits 14.2% - the most accurate measure of inflation RPI - has hit 14.2%. Rail users take a deep breath because they use RPI to set rail fares. All workers need an inflation based pay rise. To hell with poverty! @RMTunion @RMT_Scotland

— RMT UNiON EDINBUGH (@RMTedinburgh) November 16, 2022

Core inflation, which strips out food, energy, alcohol and tobacco, remained painfully high too – at 6.5% per year in October.

This could spur the Bank of England to raise interest rates by another three-quarters of a percent in December, from 3% to 3.75%.

So predicts Tim Graf, head of EMEA macro strategy at State Street:

The rise in core inflation is troubling, with an implied rate of approximately 0.7% month-on-month – one of the strongest monthly prints of this whole cycle.

Wage rises also surprised strong early this week.

Even though wage growth is not keeping pace with inflation and cracks in domestic demand are becoming more obvious, it is nevertheless hard to see anything other than a hawkish response to these numbers from policymakers. No sign of a pivot from the MPC just yet.

As just pointed out @BBCr4today, core inflation in the Consumer Prices Index - the rate stripping out volatile items like food and fuel - held steady between September and October at 6.5%:

— Andy Verity (@andyverity) November 16, 2022

The UK could face an even more damaging recession than the one currently envisaged by the Bank of England, warns Chris Beauchamp, chief market analyst at IG Group.

The news that inflation has hit a four-decade high is not perhaps the framing the chancellor wanted for his statement tomorrow, but it does underline again the twin challenges facing UK households, namely rising costs and now higher taxes.

UK inflation
Household bills and food have pushed inflation to a 41-year high Photograph: ONS

This morning’s inflation report appears to tell two stories, explains Victoria Scholar, head of investment at Interactive Investor:

The first is that inflationary pressures continue to take their toll on the consumer with prices of gas, electricity and food in particular adding to cost-of-living pressures with CPI outpacing expectations.

The rising cost of essential items means poorer families are unfairly getting hit much harder, with the inflation gap between high and low-income households reaching the widest since March 2009.

However for businesses, the picture looks more rosy. Producer input prices and factory gate rises appear to be showing an encouraging trajectory, slowing month-on-month with downward contributions from metals, crude oil and chemicals. PPI has now slowed for the third consecutive month.

Here are the key points from today’s inflation report so far:

UK inflation rises to highest since Oct 1981 at 11.1%
• Food & drink prices rise 16.4% y/y, biggest increase since 1977
• Inflation would've been around 13.8% but for the Energy Price Guarantee - @ONS
• Inflation for low income households looks more like 11.9%

— Andy Bruce (@BruceReuters) November 16, 2022

Cost-of-living gap between rich and poor widens

Those with the least money to spare are being hit hardest by inflation.

Low-income households suffered the biggest jump in the cost of living, while high income households were less affected.

That’s because low-income households spend more of their money on energy and food – where costs have soared.

The poorest 10% of households endured a 12.5% rise in their living costs – more than the average of 11.1% – while the richest 10% experienced inflation of 9.6%.

The poorest 30% of families all experienced the highest inflation.

The ONS reports that the gap between low- and high- income household inflation rates is the largest since March 2009.

Rising energy and food costs are driving higher inflation for low-income households, our new analysis of experimental inflation rates shows.

This is because a greater proportion of their expenditure is spent on essentials than high-income households’.


— Office for National Statistics (ONS) (@ONS) November 16, 2022

The inflation gap between high- and low-income households is the largest since March 2009.

CPIH annual inflation was 10.5% for low-income households and 9.1% for high-income households in the year to October 2022 – a gap of 1.4 percentage points.


— Office for National Statistics (ONS) (@ONS) November 16, 2022

Jack Leslie, senior economist at the Resolution Foundation, says the government must do more to close this cost of living gap between rich and poor:

“Everyone in Britain is affected by double digit inflation – which has caused pay packets to shrink at record rates. But some groups are more effected than others, and Britain now has a significant cost-of-living gap between rich and poor households.

“Rising energy bills and rapid food prices mean that low-income households now face an effective average inflation rate of around 12.5 per cent, while in the cold winter months, the over 80s are already facing inflation rates of around 15.3 per cent.

“This shows why the Chancellor needs to protect vulnerable households through the ongoing cost-of-living crisis when he sets out his Autumn Statement.”


UK faces "lethal combination of recession and runaway inflation.”

Record high inflation presents the biggest threat to business growth, warns the British Chambers of Commerce.

BCC head of Research, David Bharier, says many small firms find it impossible to pass on their rising costs onto consumers.

And he warns Jeremy Hunt that he must tackle inflation, and weak growth, in tomorrow’s autum statement:

“While the Bank of England seeks to control inflation through further interest rate rises, this is a blunt instrument that fails to address the core drivers of inflation for most firms: soaring energy costs, global supply chain disruption, and rising staff costs due to labour shortages.

“Ahead of tomorrow’s Autumn Statement, businesses will need to see a clear plan from the Chancellor to boost business investment and growth, as well as targeted measures that ease the specific causes of inflation.

The UK economy otherwise faces a lethal combination of recession and runaway inflation.”

Factory gate inflation has slowed (but still too high)

Alongside the shocking rise in consumer prices, there are welcome signs that the costs facing businesses are rising more slowly.

Producer input prices rose by 19.2% in the year to October, down from 20.8% a month ago, as raw material inflation eased.

That led manufacturers to raise their own prices at a slower rate. Factory gate prices rose by 14.8%, down from 16.3%.

Hopefully that trend will continue, as inflation has been driven up by firms raising their prices.

UK factory inflation
UK factory inflation Photograph: ONS


This latest jump in inflation will leave families “incredibly worried”, points out shadow chancellor Rachel Reeves:

NEW: Inflation up at 11.1% - a 40 year high. This will leave families incredibly worried.
We feel the potent impact of low growth & high inflation so harshly in Britain because 12 years of Tory economic failure have left us exposed.
Labour will secure our economy and grow it.

— Rachel Reeves (@RachelReevesMP) November 16, 2022

Hunt: We can't have long-term growth with 'insidious' high inflation.

Jeremy Hunt has blamed the impact of the pandemic and Vladimir Putin’s war in Ukraine for the spike in inflation in October.

Calling inflation an ‘insidious tax’ (as he also did yesterday), the chancellor also warned that “tough” decisions on tax and spending would be needed in Thursday’s autumn statement.

More austerity will hit growth, at a time when the UK is already heading into recession.

Hunt, though, argues that “we cannot have long-term, sustainable growth with high inflation.”

“The aftershock of Covid and Putin’s invasion of Ukraine is driving up inflation in the UK and around the world,”

“This insidious tax is eating into pay cheques, household budgets and savings, while thwarting any chance of long-term economic growth.

“It is our duty to help the Bank of England in their mission to return inflation to target by acting responsibly with the nation’s finances. That requires some tough but necessary decisions on tax and spending to help balance the books.

“We cannot have long-term, sustainable growth with high inflation. Tomorrow I will set out a plan to get debt falling, deliver stability, and drive down inflation while protecting the most vulnerable.”

October’s surge in prices means workers are suffering a deeper real wage squeeze.

We learned yesterday that average earnings (exclusing bonuses) rose by 5.7% in the year to September, the fastest growth since 2000 – but well behind inflation.

Public sector workers were worst hit – their average pay increased by just 2.2%.

Here’s Grant Fitzner, chief economist at the Office for National Statistics, explaining how rising enegy bills and food costs drove up inflation to 11.1%.

“Rising gas and electricity prices drove headline inflation to its highest level for over 40 years, despite the Energy Price Guarantee.

“Over the past year, gas prices have climbed nearly 130% while electricity has risen by around 66%.

“Increases across a range of food items also pushed up inflation.

“These were partially offset by motor fuels, where average petrol prices fell on the month, while the price for diesel rose taking the disparity in price between the two fuels to the highest on record.

Commenting on today’s inflation figures, ONS Chief Economist Grant Fitzner, said: (1/3)

— Office for National Statistics (ONS) (@ONS) November 16, 2022

Petrol prices fell by 0.5% in October, but were still around 18% more expensive than they were a year ago.

Average petrol and diesel prices stood at 163.6p and 183.9p per litre, respectively, in October 2022, compared with 138.6p and 142.2p per litre a year earlier.

Petrol prices fell by 2.9 pence per litre on the month while diesel prices rose by 2.3 pence per litre.


Food inflation highest since 1977

UK households have been hit by the biggest rise in food prices in 45 years.

Food and non-alcoholic beverage prices rose by 16.2% in the 12 months to October 2022, up from 14.5% in September 2022.

That’s the highest since September 1977, the ONS estimates.

UK food inflation
UK food inflation Photograph: ONS

The ONS explains:

The largest upward effect came from milk, cheese, and eggs, where prices for shop-bought milk and cheddar cheese rose between September and October 2022 but by more than between the same two months in 2021.


Inflation would have hit 13.8% without energy price guarantee

Without Liz Truss’s price cap, annual UK inflation would have surged to 13.8%, not 11.1%.

The Office for National Statistics says:

As an indicative estimate, without the implementation of the EPG [Energy Price Guarantee], electricity, gas and other fuels prices would have risen by nearly 75% between September and October 2022 (instead of 25%).

The EPG meant average bills rose by £2,500 per year – although there was no limit on how high bills could go. Without it, Ofgem would have lifted the price cap to an average of £3,549, up from £1971.


— Breaking Market News ⚡️ (@financialjuice) November 16, 2022


Gas and electricity prices made the largest upward contribution to inflation, despite the government’s energy price guarantee.

Rising food prices also made a large upward contribution to inflation, the ONS says.

Newsflash: UK inflation hits 11.1%

UK inflation has hit a new four-decade high – and even higher than feared.

The UK’s annual inflation rate has risen to 11.1% in October, after millions of households were hit by higher energy bills.

That’s up from 10.1% in September, as the cost of living crisis escalates, and further above the Bank of England’s target of 2%.

Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 9.6% in the 12 months to Oct 2022, up from 8.8% in Sept.

CPI rose by 11.1%, up from 10.1%.

These increases were driven by gas and electricity prices.


— Office for National Statistics (ONS) (@ONS) November 16, 2022

The ONS reckons the CPI rate would have last been higher in October 1981, where the estimate for the annual inflation rate was 11.2%.


'Precarious road ahead' as inflation fuels cost of living crisis

UK CPI inflation will have stuck in double-digits in October, predicts Oliver Rust of economic data aggregator Truflation.

The road ahead remains precarious as the pace of inflation ads to already high prices and perpetuates the severe cost-of-living crisis across Great Britain”

“At Truflation, we believe UK inflation should peak early next year; however, this depends on energy prices continuing their decline into winter. With continued fiscal tightening in the UK economy, we should see inflation moderating over the rest of this year, and we should see unemployment rising in 2023 as demand within the economy softens

Inflation moderating depends on natural gas prices remaining less elevated over the winter months and the UK grain deal between Ukraine and Russia being renewed.”

There are hopes that UK inflation could be peaking this autumn, and will fall back in 2023.

Ellie Henderson at Investec Economics said:

“Although the headline rate of inflation is unlikely to be a pleasant read, comfort may be taken that on our forecasts it could represent the peak.

“We envisage that price growth will slow from here, dragged down as economic momentum slows.

“Helping this is that the sharp increases in energy price inflation are likely to be behind us.”

Introduction: UK inflation report in focus

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

UK inflation is expected to hit a fresh 40-year high today, after households were hit by a jump in gas and electricity bills.

Economits predict that October’s consumer prices index, due at 7am, will show that prices soared by 10.7% over the last year. That would be the highest level of inflation since January 1982, up from the 10.1% recorded in September.


Inflation has been driven up by the surge in wholesale prices energy price, following Russia’s invasion of Ukraine.

Household energy bills rose in October when the energy price cap was lifted – although Liz Truss’s government capped the rise, meaning average bills would rise to £2,500 per year, not almost £3,500.

Food inflation has also been rocketing, pushing up supermarket inflation to almost 15% according to data provider Kantar.

Michael Hewson of CMC Markets explains:

These increases in food prices look set to translate into an even higher October reading of 10.7% later today, with the raising of the energy price cap also expected to act as a tailwind.

The rise in core prices is also starting to become a larger concern, despite the stabilisation being seen in energy prices in the last few months.

Having raised interest rates by 75bps last month the Bank of England will be hoping that we don’t move too much higher than the 6.5%, we saw in September.

We’ll hear the Bank of England’s latest view on inflation, when governor Andrew Bailey testifies to the Treasury committee this afternoon, alongside colleages Ben Broadbent, Swati Dhingra and Catherine Mann.

The agenda

  • 7am GMT: UK consumer inflation report for October

  • 7am GMT: UK PPI index of factory gate inflation for October

  • 9am GMT: European Central Bank publishes Financial Stability Review

  • 9.30am GMT: UK house price index for September

  • 9.30am GMT: UK rental prices index for October

  • 1.30pm GMT: US retail sales report

  • 2.15pm GMT: Treasury committee hearing with the Bank of England



Graeme Wearden

The GuardianTramp

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SVB collapse was ‘fastest since Barings’, Bank of England says, in call for vigilance – as it happened
Treasury committee holds hearing on the sudden collapse of Silicon Valley Bank this month

Graeme Wearden

28, Mar, 2023 @3:41 PM

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UK inflation could fall rapidly as energy prices drop, says Bank boss
But Bank of England’s Andrew Bailey says worker shortage may still pose major risks in cost of living crisis

Richard Partington Economics correspondent

16, Jan, 2023 @6:34 PM

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UK grocery inflation hits 14.7%; recession looms as housing market weakens – as it happened
UK households face £682 rise in annual grocery bill as prices soar, and there’s ‘no peak in sight’

Graeme Wearden

08, Nov, 2022 @3:55 PM

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US adds 531,000 jobs in October; Bank of England ‘sorry’ about rising inflation – as it happened
Rolling coverage of the latest economic and financial news

Graeme Wearden

05, Nov, 2021 @5:08 PM

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Mini-budget caused ‘full-scale liquidation event’ for pension funds; UK inflation hits 10.1% – as it happened
CPI inflation has jumped to 10.1%, highest in 40 years, as Bank of England reveals funds were ‘shouting on the phone to us’ in days after mini-budget

Graeme Wearden

19, Oct, 2022 @4:18 PM

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Bank of England not to blame for soaring inflation, says governor
Andrew Bailey defends response to Covid pandemic and indicates Bank will not take aggressive approach to raising interest rates

Phillip Inman

23, May, 2022 @5:16 PM

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Bulb Energy takeover by Octopus cleared; anger over HSBC branch closures; food inflation at record – as it happened
The UK’s sale of collapsed Bulb Energy to Octopus Energy will go ahead after it was approved by a London judge this afternoon

Graeme Wearden

30, Nov, 2022 @4:20 PM

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Bank of England says inflation likely to have peaked amid split over interest rate rise to 4% – as it happened
UK central bank predicts much shallower recession than feared, but says Brexit hit has arrived sooner than thought

Graeme Wearden

02, Feb, 2023 @4:42 PM

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Bank of England says inflation will hit 11% after raising interest rates to 13-year high – as it happened
UK central bank has raised interest rates to 1.25%, warned inflation will exceed 11% in autumn, and cut growth forecast for this quarter

Graeme Wearden

16, Jun, 2022 @2:44 PM