Inflation Hits 3.5% as Deficit Surpasses £24bn

Inflation surged to 3.5% in September, surpassing forecasts, as the government deficit reached £24.5bn, delivering a double blow to the chancellor ahead of the upcoming budget. The Office for National Statistics attributed the rise to soaring fuel prices, which have climbed since the start of the war in the Middle East. With oil and gas prices spiking, the cost of living for consumers has intensified, compounding financial pressures on the government. The government’s debt interest payments hit a record £10.9bn in September, driven by inflation-linked bond payments. Total government debt has reached £3tn, though as a percentage of the economy, it has slightly decreased from the previous year. Public sector net borrowing for the year to date stands at £97.8bn, lower than last year but still above expectations. The rising inflation has also raised concerns about the Bank of England’s interest rate decisions, with rate setters wary of inflation surpassing 4% in the coming year.