Inflation to lift off to five per cent as cost living crisis bites Brits

Inflation will hit heights not seen since the aftermath of the financial crisis, led higher by swelling household energy bills and rising prices for second-hand cars, according to City analysts.

The cost of living will rise to five per cent in October, jumping from 4.2 per cent in the previous month, according to Capital Economics.

The last time inflation was this high was in October 2011, underlining the historically elevated rate of price rises currently sweeping across the UK economy.

Meanwhile, Pantheon Macroeconomics expects inflation to hit 4.8 per cent, which would still be the highest print since November 2011.

Roaring used car prices triggered by a global semiconductor shortage squeezing supply of new cars, compounded by supermarkets passing on higher costs to consumers by hiking prices will lead inflation to a decade high.

Rising oil prices have raised the cost of petrol, likely pushing headline inflation higher.

Food “inflation likely continued to rise, probably to about 2.1 per cent, from 1.2 per cent in October” Pantheon Macroeconomics said.

Prices for essential products is likely to produce the largest contribution to the headline inflation rate, highlighting the severity of the cost living squeeze hitting households.

The Bank of England, which has a mandate to keep price rises at two per cent, will come under heavy fire if inflation hits five per cent.

Officials at Threadneedle Street are preparing for their next rate setting meeting on 16 December.