UK inflation at 1% as price of clothes and fuel rises

Rising prices for clothes, hotel rooms and petrol have led to the highest rate of inflation in nearly two years, official figures show. 

Inflation rose to 1.0% in September, up from 0.6% in August, the Office for National Statistics (ONS) said.

Clothing saw its biggest price rise since 2010 and fuel, which was falling a year ago, was also more expensive.

However, the ONS said there was "no explicit evidence" the weaker pound was the reason for higher prices.

Benefits hit

September's inflation figure has traditionally been crucial because it decided what rate benefits would increase by in the following year.

However, with the government having frozen many benefits and tax credits until 2020, many families will no longer see them keep up with rising prices.

More than 11 million households will, on average, be £360 a year worse off if inflation rises to 2.8% in the next few years, according to the Institute for Fiscal Studies (IFS).

For families on lower incomes who receive more in benefits, the hit will be bigger - on average a reduction of £470 a year, the IFS said.

'Price pressures'

Rising prices will "undoubtedly be tough on those with low incomes," said Ben Brettell, senior economist at Hargreaves Lansdown.

"It's also not good news for savers who are losing money in real terms," he added.

The jump in Consumer Price Index (CPI) inflation from 0.6% to 1.0% in September was the biggest month-on-month increase since June 2014.

The 1% rate is the highest since November 2014. However, ONS head of inflation Mike Prestwood said it was "low by historic standards".

Economists have predicted the cost of household items will rise further, particularly when the fall in the pound makes food and clothing from abroad more expensive.

Sterling has dropped nearly 20% against the dollar since the Brexit vote, including a 5% fall this month after Prime Minister Theresa May set a timeline for the UK's withdrawal from the EU.