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Inflation set to hit two-year high as pressure increases on cost of living

By Ben Woods

Inflation is expected to jump to a near two-year high when official figures for September are published today. The Consumer Price Index (CPI) measure of inflation is forecast to reach 0.9%, after stalling at 0.6% for July and August.

Pricier petrol and the rising cost of hotel bookings are expected to put upward pressure on the cost of living, with economists pencilling in CPI to hit its highest level since November 2014.

All eyes will be on food prices to see if there are any clear signs that the plunge in the value of the pound since the Brexit vote earlier this year is feeding through to consumers.

While sterling's drop against the US dollar and the euro is expected to boost exports, the move will also ramp up the cost of imported goods.

The impact of sterling's fall came into sharp focus last week when Tesco and Unilever became locked in a Mexican stand-off over a potential price hike on key products.

Britain's biggest supermarket was left grappling with a shortage of store cupboard staples - including Marmite, Pot Noodle and Persil - after reportedly refusing to bow to Unilever's demands for a 10% price rise following the collapse in sterling.

Unilever later said the dispute had been resolved, but warned that consumers would still have to stomach more pain in the New Year.

A group of former supermarket bosses said in the run-up to the EU referendum that grocery prices would rocket in the event of Brexit, dealing a devastating blow to the economy.

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