Inflation matches record high

Rising gas and electricity prices were said to have contributed to the CPI rise

Inflation reached a three-year high in September, matching a figure which last occured in September 2008, Office of National Statistics (ONS) data revealed.

The monthly consumer prices index (CPI) hit 5.2%, which was above most economists' predictions, who expected to see between 4.9% and 5.1% inflation. This rose from 4.5% in August.

Retail prices for the year are likely to make it the most inflationary since 1992, a year which saw inflation reach the remarkable figure of 7.2% in March, together with an overall inflationary reading of 4.3% for the year.

The rise in inflation will prove very unwelcome to the government, as the CPI reading for September will be used to calculate next April’s rises in benefit and pension rate, which could therefore add more than £5 billion to the benefit bill.

In other economic news, small business confidence has slipped in all regions of the UK, as 6% of a Federation of Small Business (FSB) survey of 1600 members revealed that they were expecting to lay staff off at the beginning of 2012.

The FSB called for targeted VAT cuts and national insurance contribution holidays to prevent businesses from making redundancies.