UK inflation hits highest since April 2012

| Updated: October 25, 2017 05:18:40

Photo credit - BBC Photo credit - BBC

The UK's key inflation rate hit its highest for more than five years in September, driven up by increases in transport and food prices.

The Consumer Prices Index (CPI) climbed to 3 per cent, a level it last reached in April 2012, and up from 2.9 per cent in August.

The pick-up in inflation raises the likelihood of an increase in interest rates - currently 0.25 per cent - next month.

The figures are significant because state pension payments from April 2018 will rise in line with September's CPI, reports BBC.

Under the "triple lock" guarantee, the basic state pension rises by a rate equal to September's CPI rate, earnings growth or 2.5 per cent, whichever is the greatest.

At the moment, the full new state pension is £159.55 per week, equivalent to £8,296.60 per year.

Business rates will go up by September's Retail Prices Index (RPI) of 3.9 per cent.

The fall in the pound since last year's Brexit vote has been one factor behind the rise in the inflation rate, as the cost of imported goods has risen.

ONS head of inflation Mike Prestwood 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."

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