TEHRAN- The rate of inflation in the United Kingdom rose to a 41-year high of 11.1% last month. The figure, led by the ever-increasing higher energy bills and food prices, is much more than what economists and government agencies had anticipated.

The Office for National Statistics (ONS) has revealed that the rise, from 10.1% in the month of September, was a result of the cost of living crisis and heating for homes that increased despite the government's plans to combat rising energy prices by pledging a limit on wholesale charges for gas and power.

The ONS says British households are paying 90% more for gas, electricity, and other fuels than they were paying just a year earlier.

This is while food price inflation rose from 14.6% to 16.4%, its highest level since 1977. The cost of food products has been cited as the second major element adding to the record inflation rate. Food prices are now rising at their fastest annual pace since 1977.

According to the ONS, prices rose between September and October 2022 by as much as they did in the entire year to July 2021.

Jonathan Ashworth, the main opposition Labour Party's work and pensions secretary, says the UK was less able to “weather these storms” because of what he labeled as “12 years of lackluster economic performance” under the Conservative Party.

He has also warned of a “lethal combination of recession and runaway inflation” unless the government acts.

The head of research for the British Chambers of Commerce business group, David Bharier, said separate ONS data indicated that inflation was yet to peak.

"We speak to thousands of businesses who tell us this is unsustainable ... our research shows that confidence is falling fast as many small and medium-sized businesses find it almost impossible to absorb or pass on rising costs", he said.

“While the Bank of England seeks to control inflation through further interest rate rises, this is a blunt instrument that fails to address the core drivers of inflation for most firms: soaring energy costs, global supply chain disruption, and rising staff costs due to labor shortages.

“Businesses will need to see a clear plan from the Chancellor to boost business investment and growth, as well as targeted measures that ease the specific causes of inflation.

“The UK economy otherwise faces a lethal combination of recession and runaway inflation," he warned.

Economists had expected the rate of inflation to rise to 10.7%, this figure itself is still almost double the pace of wage growth.

The news of wages rising by 5.7% last month has also been met with pessimism as salaries remain well below the official rate of inflation at 10.1%. Real wage growth was 3.7% weaker in September when the effects of inflation were included, according to the ONS.

This is while the unemployment rate rose to 3.6% from 3.5% as the number of people in employment fell by 52,000. Darren Morgan, the ONS director of labor and economic statistics, anticipates that "the proportion of people neither working nor looking for work" will rise again. 

The unions are also up in arms with one union chief saying the National Health Service is at risk of “withering away” without more funding,

Andy Prendergast, the GMB union secretary, said members are seeing the health services “get worse and worse”. His remarks come after nurses voted for industrial action for the first time in history amid an ongoing row over pay and conditions. Nurses are calling for a 17% pay rise, while waiting lists for hospital treatment are at their highest levels on record, figures revealed last week showed.

As inflation soars to 11.1%, the opposition Liberal Democrat Treasury spokeswoman Sarah Olney said the government’s “biggest economic failure has been their disastrous attempts to get inflation down”.

She says “families are now struggling to get by because of this Government’s inaction and incompetence on spiraling prices. After inflicting so much chaos, the latest Conservative chancellor is now expecting the public to clean up their mess with grossly unfair tax rises.

“Our crumbling hospitals and run-down classrooms are on the brink of savage cuts all because the Conservative party crashed the economy to fund tax cuts for the richest companies. The country will never forgive them for this.

“This week Jeremy Hunt should target the oil firms and banks making bumper profits to fill the black hole in Britain’s finances, rather than inflicting more pain and misery on struggling households.”

The surging energy prices have been the main driver of an unprecedented cost of living crisis, mostly as a consequence of Western sanctions imposed on Russian energy exports following the Ukraine war in February that sent the cost of many commodities such as wheat, and the cost of producing them, through the roof.

New research from a cross-party think-tank has revealed that over ten million people will be left facing a financial crisis over energy bills if the government moves to limit support for energy bills to people in the benefits and pension system.

The Social Market Foundation calculated that 4.5 million households who face spending more than 10% of their income (after housing costs) on energy bills will miss out on help if government support is limited to homes where people get benefits or the state pension from April.

Meanwhile, the study shows another 5 million homes – a significant proportion of them pensioner households – would get government payments even though their energy bills will be less than that 10% threshold.

The new chancellor Jeremy Hunt has warned that everyone faces higher taxes to help balance the country's dire economic situation.

The Bank of England had anticipated that inflation would have surged above 13% last month without the government energy bill intervention because average annual bills under the Ofgem (government regulator for the electricity and downstream natural gas markets) price cap would have skyrocketed to around £3,450.

The Bank is now widely expected to increase interest rates again next month when its policymakers meet, which could see the rate rise to 3.5%. UK interest rates currently stand at 2.25% having been hiked seven times by the Bank since December 2021.

However, now that the higher-than-expected inflation figure has been announced, it could mean an even higher rate rise is considered.

That would pile even more financial pressure on homeowners and other borrowers of loans following the last interest rate hike in November by 0.75 percentage points.

Last month, the country's central bank revealed that it expected the country was already in recession. Official figures last week showed the economy contracted by 0.2% in the three months to September. The Bank has now raised the prospect of seven further quarters of negative growth.

Official figures also show the economy contracted during the third quarter of the year as the cost of living crisis hit demand, leaving the country on course for a prolonged recession.

Rachelle Earwaker, a senior economist for the living standards-focused Joseph Rowntree Foundation told the Financial Times "the cost of living has millions fearing for the future, contributed to by soaring cost rises for food, transport, and energy.

"Every day sees still more stories of people selling their possessions, or borrowing money at punishing interest rates, just to afford these essentials."

As the British economy battles problems from the highest inflation in 40 years and the fallout from a disastrous record short spell of ex-PM Lizz Truss in office, British households continue to turn to food banks in large numbers as the public slowly dips into poverty in one of the wealthiest countries on the planet.

But that wealth is being largely enjoyed by a very small minority.