UK inflation reached 10.1%, the highest since 1982

UK inflation ran at 10.1% in September 2022, the highest level since 1982, the Scottish Government said in an analytical report on the cost of living crisis published on 2 November 2022¹. The same report said inflation had been 2% at the end of the previous summer and that the Bank of England was forecasting that the UK would enter recession later in 2022 and remain in recession for much of 2023¹. It added that interest rates had risen to their highest level since 2009¹.

The report, produced by a cross-government group of analysts, said UK inflation had risen from 0.5% in February 2021 to 10.1% in September, and was projected to peak at just under 11% in October¹. It said wages had risen at a much slower pace than inflation, putting considerable pressure on household incomes¹. On energy, it said prices had more than doubled over the last year despite the UK Government's Energy Price Guarantee, and cited Scottish Government modelling estimating around 860,000 (35%) fuel-poor households in Scotland, of which 600,000 (24%) would be in extreme fuel poverty¹.

The report set out devolved measures. It said that by the end of March 2023 the Scottish Government would have allocated almost £3 billion in measures to mitigate the impact of the cost of living crisis on households, spanning support for energy bills, childcare, health and travel, and social security payments¹.

Other measures listed in the report include doubling the Fuel Insecurity Fund to £20 million for households at risk of self-disconnection or self-rationing of energy use, additional Discretionary Housing Payment funding for local authorities, and emergency legislation to freeze rents and impose a moratorium on evictions until at least 31 March 2023¹.

The report identified groups it said were likely to be most negatively affected among low income households: larger families; households in receipt of means-tested benefits and those narrowly ineligible for them; households who rent their homes; disabled households; households with an unpaid carer; gypsy/travellers; rural and island households; single person households and single parent households¹. It said minority ethnic groups and women were over-represented in these households, and that homeowners on variable rates, or whose fixed rate deals expire, may face very large increases in mortgage payments¹.

Why it matters for households

The 10.1% figure is the September 2022 rate of inflation, measured by the Consumer Price Index, and it describes how much prices rose over the preceding period. It is a backward-looking number: it does not set any bill or payment, but it is the benchmark against which pay settlements, benefit uprating and savings returns are often judged. The report said the rate was projected to peak at just under 11% in October¹, so households were facing further price growth at the time of publication.

For households in Scotland, the devolved measures have specific start dates and reach. The Scottish Child Payment rises to £25 per week per eligible child from November 2022¹. The Fuel Insecurity Fund doubles to £20 million, aimed at households at risk of self-disconnection or self-rationing of energy¹. Rent freezes and an eviction moratorium under emergency legislation run until at least 31 March 2023¹. The almost £3 billion allocation covers the period to the end of March 2023¹.

The report said the crisis would affect households differently, with low income households most at risk, and that some groups risk being considerably worse off despite UK Government interventions, which it said risked increasing inequality¹. It also said the UK Government response was insufficient to fully address the harms caused by the cost of living crisis¹. The report's own figures on fuel poverty are modelling estimates, not measured counts¹.

What happens next

The report states that inflation was projected to peak at just under 11% in October 2022¹. The Scottish Child Payment increase takes effect from November 2022¹. The rent freeze and eviction moratorium are set to last until at least 31 March 2023, the same date by which the Scottish Government says it will have allocated almost £3 billion in cost of living measures¹. The report says further analysis will be required over the coming months to more fully understand the emerging consequences of the crisis¹. The next UK inflation figures were not given in the report.