Petrol up 9.1p a litre as inflation climbs to 3.1% and bills rise
Inflation went up again in August, and the biggest single reason was the price you pay at the pump. The Office for National Statistics said Consumer Prices Index inflation reached 3.1% last month, up from 2.9% in July. ONS chief economist Grant Fitzner said sharp increases in petrol and diesel prices pushed the figure higher, with more expensive airfares, particularly on long haul routes, adding to the rise.
The pump figures show how quickly it moved. According to the ONS, the average price of petrol rose by 9.1 pence per litre between July and August, reaching 161.3 pence. Diesel climbed even faster, up 14.2 pence per litre to an average of 181.8 pence. For anyone who drives to work, runs a van or does a weekly shop out of town, that is money gone before anything else is paid.
The ONS links the jump in fuel costs to the breakdown of the United States and Iran ceasefire in July, which pushed oil and gas prices up again. Economists expect inflation to keep rising over the coming months as pressure from the conflict in the Middle East continues to feed through into the cost of living.
Politically, the row was immediate. Andrew Griffith, the Shadow Chancellor, said every family is paying the price for Labour's choices, blaming the increase in National Insurance paid by employers and employment red tape for prices passed on to consumers in the weekly shop. He said Labour's energy policies were pushing up costs and leaving people exposed, and called for a serious government with a plan rather than what he described as amateurs with a bunch of pet projects.
Retailers made a similar point in calmer language. Harvir Dhillon, lead economist at the British Retail Consortium, said tackling the cost of living is a top priority and that shops continue to do what they can to hold prices down, but that until fiscal conditions improve they are fighting with one hand tied behind their back. He said business rates are perhaps the biggest of the cost pressures building up, with retailers paying a disproportionate share of the total bill.
Unions pressed from the other direction. Unite general secretary Sharon Graham said workers are sick of paying for crises they did not cause after a decade in which prices have risen by 40 per cent. She said energy bills are set to be the highest in three years while privatised firms take billions, and that mortgage rates are spiking while banks profit.
Graham urged Chancellor John Healey to unfreeze tax thresholds so workers keep more of their pay, and to take back energy profits to subsidise household and industrial bills. The next real decision point is the Autumn Budget, which the British Retail Consortium described as a chance to reset and reduce the cost pressures now building up.
Strip out the arguments and the position is simple. Fuel is dearer, flights are dearer, energy bills are heading for a three year high, and wages are being squeezed by tax thresholds that have not moved with prices. None of the people making the case in Westminster are filling the same tank or opening the same bills. Households will find out in the Autumn Budget whether anything actually changes, or whether they are told once again to hold on a little longer.
