Inflation rose this weekand most economists expect it to continue climbing throughout the year and into early 2025.

Inflation was already expected to rise later this yearbut its peak could be higher than expected due to the policies of the October budget.

The Consumer Price Index (CPI), a measure of inflation – the most commonly used measure – was as low as 1.7 percent in September, but has since climbed.

It stood at 2.3 percent, according to the latest figure released on Wednesday. The Bank of England’s goal is to have inflation around 2 percent.

Most economic forecasters now expect an increase. The Bank of England’s monetary policy report released in early November suggests inflation will reach around 2.75 percent by the second half of 2025, while Pantheon MacroEconomics estimates it will peak at 3 percent in January next year.

Deutsche Bank Research also said it was “likely that inflation has bottomed out” and that the CPI was expected to remain above 2 percent for about a year.

“The administrative tax changes planned in the fall budget increased our forecast by almost 10 basis points in 2025,” he said in a note last week.

Here’s how to prepare for a surge.

Savings

High inflation is bad news for savers because it erodes the value of money held in banks.

The higher the inflation, the less the purchasing power of your savings decreases.

If you have £1,000 in the bank and inflation is 3% over one year, then you will need £1,030 in the bank a year later for the amount to be the same value.

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This is why it is imperative that savers ensure they benefit from the rest rate on their savings.

Right now, if you shop around, it’s possible to get rates that are better than inflation, meaning your money actually grows in real terms.

The best easy-to-access account – a cash ISA from Trading 212 – pays a rate of 5.17 per cent, for example. With this account you can withdraw your money as you wish, but the rate can also drop at any time.

If you want to keep your money longer, you can get accounts with a fixed savings rate.

For example, Cynergy Bank offers a savings rate of 4.85 percent and the rate is guaranteed for six months.

Be careful though, it may be worth acting quickly as many experts believe savings rates could fall in the near future.

This is because savings rates tend to follow the Bank of England’s base rate, and the base rate is expected to fall from its current level of 4.75 per cent over the next 12 months.

Moneycomms’ Andrew Hagger said: “Sadly, savings rates will continue to fall over the coming months, but that’s no excuse not to shop around.

“Opening a new savings account online is a quick and easy process, so check the rate you’re currently getting and move on to something more rewarding.”

Mortgages

Mortgage rates aren’t directly linked to inflation, but they do have a loose connection.

Fixed rate mortgages tend to follow swap rates, which rise or fall depending on market expectations of the future movement of the Bank of England base rate.

If inflation rises unexpectedly, it may mean that the base rate is increased or does not fall as quickly as expected. If inflation falls unexpectedly, the opposite may happen.

After the budget, economists suggested that inflation would be higher than previously thought and so mortgage rates began to rise. There is now no rate below 4 per cent offered by traditional lenders and available across the UK.

Brokers say that to protect yourself from future rises, if you are nearing the final months of your mortgage contract, it may be worth trying to lock in a new rate, in case of future rate rises. You can then switch to a cheaper offer if prices drop.

Aaron Strutt of Trinity Financial said: “If your mortgage is due for renewal soon, find out what rates your lender is offering you to stay and consider getting one. It’s worth checking that you can change or modify the rate without paying a fee if mortgages go down and you spot a better deal. Lenders have different rules.

He said although rates had risen slightly recently, some of the cheaper fares still offered “reasonable value” and there was still a chance rates could fall next year.

“Many lenders are still expecting a fairly significant cut in the Bank of England base rate next year, and if that is the case, fixed rates are likely to be cheaper,” he said .

Energy prices

One of the main causes of the new rise in inflation is the fact that energy prices are no longer falling dramatically from year to year.

Inflation is an annual comparison and so at the start of summer, gas and electricity prices weighed on inflation.

Indeed, the inflation calculation took into account the comparison with prices in summer 2023, which were much higher than today.

However, towards the end of 2023 and the beginning of 2024, prices started to fall and, in comparison, the drag on inflation is therefore not as dramatic.

Forecasters widely expect a further rise in energy prices from January, with Ofgem’s energy price cap set to rise by 1 per cent.

If you don’t want to pay extra, one option is to get a fixed energy tariff.

The cheapest 12-month fix is ​​Outfox the Market’s ‘Fix’d Dual Nov24 v1.0’, which costs £1,597 per year for typical consumption, compared to £1,717 for the cap price.

Elise Melville, energy expert at Uswitch.com, comments: “Experts predict energy prices will rise again in January, but there is no reason for you to pay more. There are many fixed energy prices that are cheaper than the October price cap and the January forecast level.

“The current cheapest twelve-month patch is from Outfox The Market and costs £1,597 for households with average usage, which is £120 less than the October price cap.

“Price caps are supposed to protect consumers, but millions of people have to pay more during the coldest months of the year. With the long-term outlook for energy prices uncertain, it’s worth taking the opportunity to lock in lower rates before winter sets in.

“Consumers who are concerned about paying their energy bill should check what energy help they are entitled to and contact their supplier who may be able to offer help.”