Recent comments from The Bank of England suggest that UK inflation is likely to hit or surpass 5% by early next year.
The UK interest rate has been at a historic low of 0.1% since March 2020.
The country enjoyed on month of respite from rising inflation rates in September as the annual rate dropped to 3.1% from 3.2% in August. This has been attributed to lower restaurant price rises than in 2020 when the Eat Out To Help Out scheme ended.
The predicted rate increase is due to rising energy costs, higher wages to fill record vacancy numbers and supply chain disruption.
A separate consumer survey found that a high proportion of the UK public expect inflation to rise over the next 12 months; 48% of people it surveyed in October think inflation will accelerate, compared with 34% in September. This is likely to impact the country’s willingness to spend.
Retailers and hospitality businesses are experiencing ever-increasing costs, some of which are being passed on to shoppers. More than 8 out of 10 pubs have either already increased the price of a pint, or they plan to. This price rise is also being driven by a shortage of hospitality staff returning after furlough, which left an estimated 134,000 vacancies in the sector.
Some of the world's biggest food producers have also said they have been increasing prices of their products to cope with rising raw material costs, as well as higher energy price and supply chain difficulties.