Poor households hit hard as UK inflation sticks at five-year high - as it happened
The pound's weakness since the Brexit vote pushed consumer prices up by 3% in the last year, the joint-highest since early 2012
- Low-income households suffer most
- Breaking: UK inflation sticks at five-year high of 3.0%
- How to protect yourself against inflation
- Food inflation has hit 4.1%
- Motor fuel and furniture prices dipped
- Chart: Why inflation is high
6.06pm GMT
A stronger euro following positive eurozone growth figures helped undermine European markets, while Wall Street fell back on concerns about the Republican's tax plans and the prospect of rising interest rates.
In the UK, the FTSE 100 outperformed other major indices, despite a fall in mining companies as commodity prices lost ground on weak Chinese data. The UK index was helped by positive performances from Vodafone following its results and Tesco after its takeover of Booker was cleared by competition authorities. The final scores showed:
5.31pm GMT
When the Bank of England raised interest rates earlier this month, two members of its monetary policy committee voted to keep them on hold.
In a speech to the Oxford Economics Society one of them, Sir Jon Cunliffe, has been explaining his reasoning. His decision came because of uncertainty around the relationship between pay and unemployment, which is an important guide to domestic inflationary pressures. He said:
Given the uncertainties " and the serial disappointments we have had in recent years in forecasting the impact of unemployment on pay growth, there is, in my view, a not immaterial risk that the trade-off is not as it currently appears and that domestic inflation pressure will undershoot the Committee's collective expectation.
In my view, the low level of domestic pressure on inflation now, the absence of second round effects from the depreciation of sterling, and inflation expectations around their historical averages, make it possible to wait before tightening policy until there is clear evidence that pay growth is responding to the level of unemployment in line with our forecast.
Some of the relationships between economic variables that we depended on in the past appear to have gone on a longish leave of absence, but we are not sure why, or whether this is a temporary or more persistent departure.
Against that background - and although it makes forward-looking monetary policy more difficult - I tend to put more weight on the evidence we can or cannot see in the data, and a little less on the un-observables and on how we think the economy works.
We can, in my view, only work on what we see in the economy now, and stand ready to respond as necessary as Brexit emerges.
5.24pm GMT
Heads Up! Bank of England Deputy Governor Jon Cunliffe due to speak at 17:30 GMT #BoE $Gbp pic.twitter.com/9n97o35q5I
5.20pm GMT
Gocompare.com, the price comparison website spun out of esure a year ago has rejected a takeover bid from property group ZPG, owner of Zoopla.
ZPG offered 110p a share, valuing Gocompare at nearly 420m, but its target said the offer fundamentally undervalued its business.
4.31pm GMT
Over in Greece prime minister Alexis Tsipras has taken many by surprise with an announcement that his government will distribute a1.4bn worth of welfare handworks to citizens worst hit by cuts in the coming weeks. Helena Smith reports from Athens:
Attempting to repeat his politically adroit gesture of handing out pre-Christmas 'gifts' last year, the leftist leader said the Greek economy had done so well his government had decided to distribute a 1.4bn from the primary surplus it had posted in 2017.
In a televised address that took many by surprise, Tsipras said the government had decided to more than double the amount it would distribute in the form of a one-off "social dividend" in December.
"We are in the very pleasant position of being better prepared and more organised to offer an even bigger amount " to the people who need it most," he said.
Because the debt-stricken country had beaten fiscal bailout targets mandated by international creditors keeping it afloat, a720m of the primary surplus would go towards buttressing households earning less than a18,000 annually, the equivalent of around 3.4 million people, he said.
Another a360m would be given to Greece's public power corporation to protect poorer consumers from tariff increases while a315m would alleviate "unfair" health insurance payments previously incurred by pensioners.
3.59pm GMT
Stock markets are under pressure at the moment, with worries about the Trump tax plans, a stronger euro and declines in commodities combining to send shares lower. Connor Campbell, financial analyst at Spreadex, said:
The euro seemed to be the only real winner this Tuesday, with the currency managing a robust rise as seemingly everything else fell.
The Dow Jones joined in with the wider decline after the bell. The US index dropped nearly 150 points, hitting a fortnightly low as it struggles to keep its head above 23300 due to doubts about Donald Trump's tax plan.
3.37pm GMT
Falling real pay, higher housing costs, and cuts to benefits are limiting the ability of UK households to save money for emergencies and retirement, MPs on the Treasury Select Committee have been told.
In the first session of the committee's inquiry into household finances, Torsten Bell, director of the Resolution Foundation, said family budgets were being constrained as wages in real terms are 15 a week lower than they were before the financial crisis.
"In those circumstances - and housing costs have gone up quite a lot during that phase - then obviously people are finding it hard to save," Bell said.
He added that many low to middle income families say that while they'd like to save 10 or more a month, they cannot afford to do so.
2.42pm GMT
US markets are heading lower in early trading, on continuing concerns about the Republican tax plans. Investors are also worried that further interest rate rises - with another expected next month - could harm the economic recovery.
Weaker than expected Chinese data overnight also added to the downbeat mood.
2.16pm GMT
The pound remains weaker against both the dollar and euro.
The stronger than expected US producer prices figures are supporting the US currency, with the pound now down 0.05% at $1.3108.
1.53pm GMT
Over in the US, and producer prices climbed by more than expected in October.
The month on month figure rose by 0.4%, the same figure as in September but higher than the forecast 0.1%. On a yearly basis, prices were up 2.8% compared to expectations of a 2.4% rise and a 2.6% increase in September.
1.43pm GMT
UK house prices continued to climb in September, according to separate figures released by the ONS.
Prices increased by 5.4% in the year to September 2017, up from 4.8% in the year to August. The ONS said the annual growth rate had slowed since the middle of 2016 but remained around 5% during 2017.
Further signs of cooling housing market in London in latest ONS data. Rolling-average number of transaction in Inner London fallen to lowest since early-2010 pic.twitter.com/IwwG8C1pAW
We see house prices being muted over the fourth quarter and then rising a modest 2%-3% in 2018.
The fundamentals for house buyers are likely to remain challenging over the coming months with consumers' purchasing power continuing to be squeezed by inflation running higher than earnings growth.
1.27pm GMT
Time for a quick recap.
Here's what contributed to that 3% CPI inflation rate in Oct. Food prices rising at fastest rate since 2013 pic.twitter.com/zM2UJyXc9K
The jump in inflation for food and drink items to 4.1% hits those on lowest wages the hardest. People already feeling the rising cost of everyday items. https://t.co/YJMT2Es6T4
Inflation may be steady at 3% but vegetable prices up 5.7% - bad news for anyone on a tight budget, and a blow to healthy eating. Happy Christmas. https://t.co/r7iPWuS6Tv
"The government needs to take action in next week's budget, ensure the pay cap is lifted and give public service employees a decent wage rise."
Related: Post-Brexit vote surge in UK inflation may have peaked at 3%
1.20pm GMT
Over in Frankfurt, the Bank of England's governor has spoken about Brexit....
Britain is experiencing "exceptional circumstances" because of Brexit, Mark Carney says https://t.co/LNr0A23mjq pic.twitter.com/xxR2zNbbmh
1.01pm GMT
The jump in food price inflation to 4.1% may drive more families to Britain's growing roster of food banks.
Garry Lemon of the Trussell Trust, a charity which runs food bank, says it's already an issue:
Worrying to see food price #inflation so high. @UniofOxford research by @rloopstra showed that 1/4 households coming to @TrussellTrust network of #foodbanks reported rising food costs as an issue last winter.https://t.co/NDNjO6aoW3 https://t.co/8yEjHZvELv
12.48pm GMT
Several City economists are predicting that inflation may now have peaked, having stuck at 3% last month.
The theory is that the impact of the pound's Brexit-induced tumble will fade out of the annual inflation figures before much longer. And with the economy weak, it will be hard for retailers to hike prices.
CPI inflation remained unchanged at 3% in October, against consensus expectations of a small rise. We expect inflation to ease in the coming months, as the feed-through from sterling's past decline fades pic.twitter.com/XqSL5k4KZS
"This food cost inflation has yet to fully come through to prices on the shelves - the recent inflation figures for the UK were 3%, with food a main contributor.
But that still doesn't fully reflect the costs rises, so we expect food prices to continue to rise during the final quarter of 2017. One of the reasons for this is the time lag, as costs rise in terms of feeding through the food chain from importers to suppliers to supermarkets themselves.
"It is likely that inflation has peaked at 3%, but will fall very slowly over the next year or two. This will provide little comfort to those losing money every day on their savings where the bank's rate of interest is less than inflation.
"The recent base rate rise will have also driven up borrowing costs, whilst not passing much on to savers so, with inflation perhaps falling slowly now from 3%, this rise may have been implemented prematurely."
11.32am GMT
With wages rising at little more than 2%, and inflation at 3%, Christmas will be a squeeze for many families.
Hannah Maundrell, editor in chief of money.co.uk, has some advice for coping with the cost of living:
11.21am GMT
Here's more details from Resolution's Stephen Clarke on how inflation is hurting poorer households:
"While the headline rates of inflation remained unchanged, the drivers of inflation have continued to shift - and are hitting less well-off families particularly hard.
"Food and drink prices increased faster than at any point in the last four years, while clothing prices also rose at a rate above overall inflation. The rising cost of these basic items affects low and middle income households far more than better-off households, who are also being cushioned by static fuel costs.
10.58am GMT
Stephen Clarke of the Resolution Foundation has interrogated today's data, and shown that poorer households are suffering particularly badly from the surge in inflation.
That's because essential items, such as food, are rising sharply in price. Higher energy bills also hit families across the board.
The rising price of essentials hits lower income households harder. The result is that inflation over past 6 months higher for lower-income households, richer households felt the squeeze last winter (2/2) pic.twitter.com/ANjqmuGdul
10.44am GMT
A Treasury spokesperson says the government is trying to fight the cost of living squeeze:
"We understand that people are concerned about increases in everyday costs. That's why we have cut taxes and introduced the National Living Wage, which has lifted the wages of the lowest paid by over 6% above inflation.
It's also why we are bringing in an energy cap to help people with the cost of household bills."
10.34am GMT
The jump in food and drink prices are a particularly blow for the poorest in society (as everyone has to eat).
So even if inflation peaks soon, the cost of living squeeze could continue for a while.
"With monthly inflation gradually moderating, households will be relieved that the UK may have now reached the peak in year-on-year price rises.
However, the overall figures mask significant increases in the price of basic necessities such as fruit and vegetables, which are most likely to hit those already struggling to cope with the squeeze on real incomes due to the high inflation.
10.29am GMT
Labour MP Chuka Umunna says the "ongoing Brexit chaos" is hitting people in their pockets.
"Not only is inflation continuing to run well above the Bank of England's target, at 3%, but the inflation rate for food and drink has increased to 4.1%, the highest since September 2013.
"People are feeling the Brexit squeeze as real wages contract and everyday items become more and more expensive. Nobody voted in the referendum to make themselves poorer, so people have every right to look at the impact Brexit is having on their finances and ask themselves whether the realities of Brexit match up with what they were promised. If not, everyone has the right to change their mind.
Related: Theresa May ally accuses Hammond of vetoing policies promoting 'economic justice' - Politics live
10.16am GMT
On one level, today's inflation reading is a relief to the Bank of England.
The BoE is responsible for maintaining price stability. So governor Mark Carney won't have to write a letter explaining why CPI has deviated more than 1 percentage point away from the 2% target.
So UK inflation still at 5 year high but has it reached its peak?begs question were interest rates raised too soon given economic weakness?
10.14am GMT
Inflation is measured across a number of areas. And this chart neatly shows how transport (yellow) and food (blue) have driven inflation higher this year.
Food and transport (fuels) important drivers of change in #inflation rate over last 2 years pic.twitter.com/AUfJstQN8o
10.10am GMT
Alistair Wilson, Head of Retail Platform Strategy at Zurich, sees some light at the end of the living squeeze tunnel:
"Higher inflation is creating a living standards headache for families as prices continue to rise faster than their pay packets.
However, there are signs that the worst of the squeeze on family finances may be coming to an end with British workers set for the biggest pay rises since before the financial crisis, likely to increase by between 2.5% and 3.5% next year.
10.03am GMT
At 3%, Britain's inflation rate is outstripping pay rises - -which only rose by 2.1% over the last year.
TUC General Secretary Frances O'Grady says the government needs to take action -- and next week's budget is the perfect opportunity.
"The government must stop turning a blind eye to Britain's cost of living crisis. Household budgets are being stretched to breaking point.
"Wages will continue to lag behind inflation unless the Chancellor acts.
10.00am GMT
Housing and household service costs made the biggest contribution to Britain's inflation last month.
That's due to electricity price rises, and increases in council tax over the last couple of years.
9.51am GMT
The jump in inflation over recent months is clearly a blow to UK consumers, even though October's reading isn't as bad as feared.
Thomas Wells, manager of the Smith & Williamson Global Inflation-Linked Bond Fund, says households are still suffering the aftermath of the 2016 Brexit vote:
"UK inflation remains elevated, in line with our expectations. We continue to view the post-referendum weakness in sterling as the key driver of the recent spike in inflation, putting pressure on household budgets.
"This is unquestionably bad for consumers, especially when combined with the recent increase in interest rates pushing up mortgage repayments. We therefore expect conditions to remain tough, putting downward pressure on demand, and hence inflation, over the next six months.
9.46am GMT
The cost of food and non-alcoholic beverages rocketed by 4.1% over the last 12 months -- helping to keep overall inflation high.
9.44am GMT
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9.43am GMT
Here's a chart showing how UK inflation is running at a five-year high this autumn:
9.38am GMT
9.32am GMT
Breaking! Britain's inflation rate has stuck at 3.0% in October, matching September's five-year high.
That means there's no let-up in the cost of living squeeze hitting UK households.
9.29am GMT
Here we go....
Stand by your desks! UK inflation and house price data and PPI is due in a minute or so #CPI
9.13am GMT
Italians didn't have much to cheer about during last night's football. But this morning's economic data is a whole new ball game!
Italy's economy expanded by 0.5% in the third quarter of this year, ahead of expectations for a 0.4% rise.
Italy will miss the World Cup but clearly isn't missing the #euroboom. https://t.co/gVI7pMsko4 pic.twitter.com/nAGeKO01Yf
*ITALIAN ECONOMY EXPANDED 1.8% IN 3Q Y/Y; EST. 1.7% GROWTH
9.03am GMT
The Netherlands economy grew by 0.4% in the last quarter, new figures show. That's in line with forecasts:
#netherlands economy grew 0.4% q/q in Q3 after a record Q2. Consumption, investment and export contributed to growth. Very strong run pic.twitter.com/NpOy2ayvt6
9.00am GMT
Economist Rupert Seggins has tweeted some useful charts ahead of today's UK inflation data, due in 30 minutes:
1. UK inflation for October out today & consensus is for a 3.1%y/y rise in consumer prices. Up a little on September's 3.0%y/y pic.twitter.com/7JakuKG6P0
2. Core inflation - if history is anything to go by, sterling's not done with it yet. Consensus is for it to nudge up to 2.8%y/y. pic.twitter.com/lzNT8Zy4bE
3. Oil price inflation was down in October compared to September, so may offer some temporary respite. pic.twitter.com/AG1GOUxjj5
4. Room for food price inflation to ease a little, given recent (slightly lower) food manufacturing input inflation. pic.twitter.com/eILELl1Jo2
5. UK inflation relatively high but not wildly different to US and Euro Area; energy price inflation's global; core still the one to watch. pic.twitter.com/ESkSRWbWol
8.51am GMT
Here's Kit Juckes of French bank Socii(C)ti(C) Gi(C)ni(C)rale on today's German growth figures:
Europe's economic heart is pumping away and a 0.8% Q3 q/q GDP gain in Germany threatens to nudge the Eurozone growth rate up too. It's a reminder of the changing of the guard as the US economic cycle ages.
8.44am GMT
Tesco executives might be reaching for a bottle of Finest fizz later; they've just been given a provisional green light to buy cash-and-carry group Booker.
The UK's competition authorities have concluded that the deal won't mean higher prices or a poorer service for shoppers.
Related: Tesco's 3.7bn takeover of Booker given green light
8.37am GMT
Over in the City, ITV has reported that TV ad revenue fell 7% in the first nine months of the year.
8.28am GMT
The euro has hit a three-week high, on the back of Germany's strong growth.
The single currency has risen 0.3% to $1.17, its highest rate since 26th October (when the ECB decided to extend its stimulus programme into 2018)
8.17am GMT
In another boost, Germany's growth rate in the first three months of 2017 has been revised up to 0.9%.
German real GDP expanded by 0.8% q-o-q in Q3, beating expectations (0.6%).
This comes after GDP growth of 0.6% in Q2 and an upwardly-revised 0.9% in Q1.
In Q3, positive contribution came from foreign trade and investment.
Carry-over effect for 2017: 2.4% pic.twitter.com/XzvwyQy8gk
8.09am GMT
Today's growth figures show that Germany remains "the high-flyer of the Eurozone", say Carsten Brzeski of ING.
He's impressed that German GDP grew by 0.8% in the last quarter, writing:
Never tired of good news? Then have a look at the latest German GDP data. The economy continues its golden cycle and staged yet another strong growth performance in the third quarter.....
Growth was driven by public consumption, investment and net exports. Only the construction sector took a longer vacation break. Even if the economy would stagnate in the final quarter of the year, GDP growth for the entire year would still come in at 2.4%; the highest reading since 2011.
Germany: Still flying high - The golden cycle of the German economy continues, with 3Q GDP growth coming in at 0.8% QoQ. https://t.co/5Advek0Bos
8.01am GMT
Boom! Germany's economy has beaten expectations by growing twice as fast as the UK in the last quarter.
Germany powers ahead. Q3 GDP QoQ 0.8%
"German economic growth continues at a high rate.
"Exports were stronger than imports in the third quarter. As a result, net exports had a positive impact on the GDP compared to the previous quarter.
Strong Q3 performance means Germany is having its best growth year since 2010, running further above potential. My take: https://t.co/X2jfgCpweJ pic.twitter.com/7VswWpNDMO
7.45am GMT
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