The Consumer Prices Index has reached the highest rate in over 5 years.
The key inflation rate in the UK, the Consumer Prices Index (CPI) rose to 3% in September, up from 2.9% in August. The CPI measures changes in the price of consumer goods and services purchased by households, and is “a statistical estimate constructed using the prices of a sample of representative items whose prices are collected periodically”.
The Good News
It is expected that interest rates will also increase as a result of the latest inflation figures, which is good news for savers. The CPI increase is also good news for those with state pensions. This is because the Triple-Lock dictates that the payment amount will increase each year by either CPI rates in September, earnings growth or 2.5% - whichever is the largest amount. The BBC have more details on how an inflation rate rise could benefit you.
Why Has Inflation Risen?
Mike Prestwood, the Head of Inflation at the Office for National Statistics said: "Food prices and a range of transport costs helped to push up inflation in September. These effects were partly offset by clothing prices that rose less strongly than this time last year." A number of economists have identified Brexit as the key factor that is pushing up prices, as the weakened pound has seen imports become more expensive.