The latest Consumer Prices Index figures show the rise in the cost of living fell to 3.1 per cent in the year to September – down slightly from 3.2 per cent in August.
However, the inflation figure remains far above the Bank of England’s target rate of 2 per cent, as fuel, food and transport costs remain a struggle for many people across the country.
“I think it’s a real cause of some concern because, clearly, we want inflation rates to be lower,” Kwarteng told the BBC yesterday.
The business secretary added: “There’s a debate at the moment as to how long this inflation will last – I’m confident that it’ll be contained. We’ll have to wait and see.”
Kwarteng pointed to growth sparked by the reopening of the economy after the Covid pandemic as a cause for price hikes.
“One of the causes for inflation is the fact that the economy is rebounding … it’s a fast rebound,” he said. “When you see quite strong economic growth there’s always the danger you’ll have inflation.”
Average petrol prices stood at 134.9 pence per litre in September 2021, compared to 113.3 pence per litre a year earlier, as fuel continued to apply upward pressure to inflation.
Food and drink companies told MPs on Tuesday that they were facing “terrifying” rises in costs amid worker shortages and ongoing supply-chain woes.
Ian Wright, chief executive of the Food and Drink Federation, told a parliamentary committee that the government must “think seriously about inflation”.
He added: “In hospitality, inflation is running between 14 per cent and 18 per cent, which is terrifying. If the prime minister is, as I know he is, serious about levelling up, inflation is a bigger scourge than almost anything because it discriminates against the poor.”
Mike Hardie, head of prices at the Office for National Statistics, said: “Annual inflation fell back a little in September due to the unwinding effect of last year’s “Eat out to help out” scheme, which was a factor in pushing up the rate in August.
“However, this was partially offset by most other categories, including price rises for furniture and household goods, and food prices falling more slowly than this time last year.”
Mr Hardie added: “The costs of goods produced by factories rose again, with metals and machinery showing a notable price rise. Road freight costs for UK businesses also continued to rise across the summer.”
The business secretary also conceded that making the transition to net-zero carbon emissions could be “very costly” for consumers.
This follows the Treasury’s report on the cost of net zero – which warned that the transition from fossil fuels would require new sources of taxation to replace the £37bn lost from petrol taxes, and could curb household disposable incomes.
Asked about the Treasury report and the possibility of tax hikes on LBC radio, Kwarteng claimed: “I don’t think that tax rises are inevitable,” before saying that chancellor Rishi Sunak’s department had “various assumptions that model those figures”.
But the minister also insisted that some of the cost to consumers transitioning to net zero would be driven down by private investment.
Mr Kwarteng said the government was “trying to actually attract huge amounts of private investment into the UK, and what happens with private investment is that the unit cost of the energy actually is driven down, it’s lowered, it’s cheaper”.
He told Sky News: “It’s a fine line you have to tread between making the transition and essentially forcing people and imposing costs on people to make the transition, and what we want to do is to keep people with us on the transition, on the journey.”
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