Inflation measured by the consumer prices index in the year to September rose by 10.1%, up from August’s figure of 9.9%, adding to employers’ challenge when it comes to supporting staff with comparable pay settlements.
The consumer prices index is now at the same level as in July and at its highest level since 1982, when it was estimated through modelling to have reached 11% (the index was first introduced as a national statistic in 1997).
The consumer prices index including owner occupiers’ housing costs (CPIH) rose by 8.8% in the 12 months to September 2022, up from 8.6% in August, also returning to July’s recent high.
Food and drink drove inflation most, with prices rising 14.6% when measured by CPIH, followed by transport (10.9%) and furniture and household goods (10.8%).
Darren Morgan, director of economic statistics at the Office for National Statistics, said: “The rise was driven by further increases across food, which saw its largest annual rise in over 40 years, while hotel prices also increased, after falling this time last year.”
The annual retail prices index (RPI) for September was 12.6%. While no longer a national statistic, the ONS still calculates it each month as it is used in relation to many contracts and negotiations – it is still often cited by trade unions in collective bargaining.
Toyah Marshall, principal employment law adviser and solicitor at WorkNest said: “The news should serve as a reminder to review whether your pay is competitive in the external market and to make sure that you have a well-defined pay structure which aligns to the outcomes of job evaluation. That said, it’s prudent to consider whether giving a pay rise is the right way to solve the cost of living crisis.
“While most employers do want to support their employees in any way they can, giving uninformed pay rises as a kneejerk reaction could cause issues in the long term so get the correct advice first.
Inflation September 2022
“It would lead to a situation where salaries become out of line with the market data or with skills required for the job, whilst things like the gender pay and any existing salary disparities run the risk of becoming exacerbated.”
TUC general secretary Frances O’Grady said: “Millions of people are already skipping meals and turning off the heating. Yet the prime minister and chancellor still refuse to confirm that universal credit, pensions and benefits will keep up with inflation.
“It is no wonder so many working people are seeking higher wages and taking action to win fair pay deals.”
Martin Sartorious, principal economist at the CBI, said that while inflation in September 2022 returned to its recent 40-year high, it is expected to grow further in October as energy bills rise.
“While the chancellor’s statement on Monday seems to have restored some fiscal stability, adjustments to the Energy Price Guarantee suggest inflation may yet remain higher for longer,” he said.
“The prospect of household energy bills rising sharply again in April 2023 emphasises the need for government to set out the details of any future targeted support sooner rather than later, in addition to how the country will establish its longer-term energy security.”