Inflation surges to record high

With UK inflation hitting a three-year high, is Britain in danger of throwing away its reputation as a low-inflation state?

Inflation jumped to 5.2% in September, up from 4.5% in August, due largely to a surge in gas and electricity bills. The annual change in the Consumer Price Index (CPI) has matched the rate seen in September 2008, the highest level since the index was introduced in 1997. Underlying inflation, or core CPI, which strips out food and energy prices, remains historically high, climbing to 3.3%. The broader Retail Price Index, which includes mortgage costs, is at a 20-year high of 5.6%. The Bank of England (BoE) expects inflation to subside next year as the rise in VAT drops out of the annual comparison and energy prices stabilise.

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