Inflation nears 30-year high as consumer price index climbs to 5.5 per cent
UK inflation has remained at a near 30-year high after rising further in January as Britain remains in the grip of a tightening cost-of-living squeeze, according to official figures.
The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation reached 5.5 per cent in January, up from 5.4 per cent in December and remaining at the highest level since March 1992, when it stood at 7.1 per cent.
The ONS said the cost of clothes and footwear pushed inflation higher last month, with the lowest January discounts in shops since 1990.
But inflation is soaring across the economy, driving CPI up to more than double the Bank of England’s 2 per cent target.
Rising energy prices and fuel costs have been the biggest factors in driving inflation up to near 30-year highs, though food and drink prices and many everyday essentials have also been on the rise.
The Bank hiked interest rates earlier this month to 0.5% in the first back-to-back increase since 2004, signalling more are on the way as it looks to rein in rampant inflation.
It is forecasting that inflation will soar further due to painful energy price rises before peaking at 7.25 per cent in April – the highest level since August 1991.
Grant Fitzner, chief economist at the Office for National Statistics (ONS), said: “Inflation ticked up again in January, reaching a near 30-year high.”
“Clothing and footwear pushed inflation up this month and although there were still the traditional price drops, it was the smallest January fall since 1990, with fewer sales than last year,” he added.
“The rising costs of some household goods and increases in rents also pushed up inflation. However, these were partially offset by lower prices at the pump, following record highs at the end of 2021.”
Sunak response
Responding to the latest figures, the Chancellor of the Exchequer, Rishi Sunak, said this morning that “we understand the pressures people are facing with the cost of living.
“These are global challenges, but we have listened to people’s concerns and recently stepped in to provide millions of households with up to £350 to help with rising energy bills.
“We’re also helping people on the lowest incomes keep more of what they earn by cutting the Universal Credit taper rate, and freezing alcohol and fuel duties to keep costs down. In total we’re providing support with the cost of living worth over £20 billion across this financial year and next.”
Annabelle Williams, personal finance specialist at Nutmeg, the digital wealth manager, discussed the latest inflation figures with City PM this morning:
“It’s groundhog day for the UK as once again the data shows that inflation is tearing ahead. There is no way to sugar coat it; the cost of living hasn‘t been this high in thirty years and wages aren’t rising to keep pace,” she said.
“There’s been a smorgasbord of price increases for everything from food to energy, and household goods to broadband – making inflation very difficult to avoid.”
“What’s important to remember is the headline figure of 5.5 per cent, hides a much more difficult reality. Mushrooms cost 10 per cent more than a year ago, a bunch of grapes is up 12 per cent and a shoulder of lamb has risen by 16 per cent. The cost of everyday living is soaring,” Williams said.