UK faces tough winter as prices stay high

Britain may well have seen the peak in the actual inflation number. We are nowhere near the peak of the impact on society and households.

Even in the leafy Gloucestershire Cotswolds, where there always have been pockets of deprivation, I was repeatedly told that people were simply not putting their heating on, with impacts on their health.

That might have been manageable up until now, thanks to the unusually mild winter, which has also helped calm the international market prices for gas and electricity. But there is much fear about what happens when winter hits in earnest.

October was always going to be a very tough month for figures on the cost of living. Despite the Energy Price Guarantee, inflation at 11.1% is at a 41-year high. Without the guarantee, which limits the rise of typical bills to £2,500, it could have been more like 13%.

But consumers don’t need to be told how wide-ranging this is, with food price inflation up again to the highest rate in 45 years, driven by the cost of things like milk and cheese.

In Gloucester Market, the packs of 12 Christmas cards that normally cost £1, which were recently pushed up to £1.50, are now selling at £1.99.

And yet in global markets there are the smallest signs that the initial reasons behind the spike in inflation a year ago, post-pandemic supply chain problems, are starting to turn. It can be seen most clearly in the used car market, which was among the very first harbingers of the broken supply chain inflation spike, and is now leading the falls. The more relaxed approach to China’s “zero Covid” lockdowns has also meant there is some light at the end of the tunnel about prices.

Energy remains tough, but much will depend on tomorrow’s announcements from the chancellor at his Autumn Statement. I expect that we will hear not just about a more targeted scheme of support, but also about the rollover of some of the welfare-related support schemes that were due to end in April under Liz Truss’ plans.

But undoubtedly some above-average households, that do not consider themselves to be “rich”, will be facing less protection from the cold winds of the international energy markets and the war in Ukraine.

So prices will stay very high for a few months at least, as it takes some time for these global factors to feed into everyday prices.