Inflation rises by half a per cent

CPI now stands at 2.7 per cent.

The ONS has released the inflation report for this month. It's up. A lot:

The Consumer Prices Index (CPI) annual inflation stands at 2.7 per cent in October 2012, up from 2.2 per cent in September. The main upward pressure came from the education sector (university tuition fees) with smaller upward contributions from food & non-alcoholic beverages and transport. These were partially offset by downward pressures from the housing & household services, recreation and miscellaneous goods & services sectors.

The Retail Prices Index (RPI) annual inflation stands at 3.2 per cent in October 2012, up from 2.6 per cent in September.

That's the highest since May for the CPI, and 0.4 points higher than the consensus estimate (which was for 2.3 per cent for RPI and CPI). The fact that the main upward pressure came from tuition fees means that this rise is almost entirely due to the government's own decisions – and also that it is all-but-guaranteed to fall by an equivalent amount in a years time.

The extent of the effect of rising tuition fees is clear in this chart, which breaks down the various contributions of different spending categories on inflation:

This is a crisis of a sort: It is also important to point out that this now leaves inflation again racing ahead of wage growth, by a full percentage point (wage inflation stood at 1.7 per cent in the last estimate); and the idea of a "misery index" - compounding the effects of inflation and unemployment together to see the pain the economic climate inflicts on the typical person - indicates that this rise will wipe out recent goodwill gained from the falling unemployment rate. But it is not a macroeconomic crisis; without the government's short-sighted actions in 2010, this rise would be just 0.1 per cent, easily enough to argue that low inflation is here to stay. We'll see next month what happens to the overall trend.

Andrew Goodwin, senior economic advisor to the Ernst & Young ITEM Club, comments:

This is a very nasty surprise. We had expected inflation to pick up in October because of the rise in tuition fees and food prices, but the scale of the increase was surprisingly large. 

Further out we are still confident that inflation will slow back towards the target. And because of the causes of the October increase, it could be argued that these figures aren’t quite as bad for household finances as they may first appear. They represent a significant squeeze for those affected directly by the tuition fee increase, however the vast majority of people will not have been impacted. 

Finally, it is worth pointing out that the inflation target is a symmetrical one. The Bank of England's mandate is to bring inflation to 2 per cent, and it must write a letter to the chancellor explaining why it has failed if it is more than one point away in either direction. If inflation does stay below three per cent, then it remains not much to worry about.

Updated 9:53 and 11:29 with further analysis.

 

A student walks through St John's, Cambridge. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Donald Trump vs Barack Obama: How the inauguration speeches compared

We compared the two presidents on trade, foreign affairs and climate change – so you (really, really) don't have to.

After watching Donald Trump's inaugural address, what better way to get rid of the last few dregs of hope than by comparing what he said with Barack Obama's address from 2009? 

Both thanked the previous President, with Trump calling the Obamas "magnificent", and pledged to reform Washington, but the comparison ended there. 

Here is what each of them said: 

On American jobs

Obama:

The state of our economy calls for action, bold and swift.  And we will act, not only to create new jobs, but to lay a new foundation for growth.  We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together.  We'll restore science to its rightful place, and wield technology's wonders to raise health care's quality and lower its cost.  We will harness the sun and the winds and the soil to fuel our cars and run our factories.  And we will transform our schools and colleges and universities to meet the demands of a new age.

Trump:

For many decades we've enriched foreign industry at the expense of American industry, subsidized the armies of other countries while allowing for the very sad depletion of our military.

One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

Obama had a plan for growth. Trump just blames the rest of the world...

On global warming

Obama:

With old friends and former foes, we'll work tirelessly to lessen the nuclear threat, and roll back the specter of a warming planet.

Trump:

On the Middle East:

Obama:

To the Muslim world, we seek a new way forward, based on mutual interest and mutual respect. To those leaders around the globe who seek to sow conflict, or blame their society's ills on the West, know that your people will judge you on what you can build, not what you destroy. 

Trump:

We will re-enforce old alliances and form new ones and unite the civilized world against radical Islamic terrorism, which we will eradicate completely from the face of the earth.

On “greatness”

Obama:

In reaffirming the greatness of our nation we understand that greatness is never a given. It must be earned.

Trump:

America will start winning again, winning like never before.

 

On trade

Obama:

This is the journey we continue today.  We remain the most prosperous, powerful nation on Earth.  Our workers are no less productive than when this crisis began.  Our minds are no less inventive, our goods and services no less needed than they were last week, or last month, or last year.  Our capacity remains undiminished.  

Trump:

We must protect our borders from the ravages of other countries making our product, stealing our companies and destroying our jobs.

Protection will lead to great prosperity and strength. I will fight for you with every breath in my body, and I will never ever let you down.

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland