UK inflation eases to 9.9% but remains close to 40-year high – business live

Inflation eases because of a fall in petrol and diesel prices while food prices rise at fastest rate since mid-2008, driven by milk, cheese and eggs

James Smith, developed markets economist at ING, has looked at core inflation in more detail.

Headline inflation will rise a little further having eased back below 10% in August, and it’s likely to stay around 11% into early next year before falling back more dramatically. However, the Bank of England is watching wage growth more closely, as the hawks worry that worker shortages could lead to core inflation staying more persistently above target.

With the government due to cap the average household energy bill at £2,500, up from around £2,000 now, we expect a peak in the region of 11% in October. That’s compared to 16% in January which is what we’d forecasted before the support was announced.

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