Cost of living soars to highest point in 30 years as inflation hits 5.4%
Inflation has soared to its highest level in 30 years as Britain’s cost of living squeeze intensifies.
Official figures show that inflation rose to 5.4% last month – the highest rate since March 1992.
It comes a day after data showed wage rises for UK workers are already being wiped out by surging prices.
The Office for National Statistics (ONS) said inflation was pushed higher by the rising cost of food and non-alcoholic drinks last month, as well as restaurants and hotels, furniture and household goods and clothing and footwear.
Grant Fitzner, chief economist ONS said: ‘Food prices again grew strongly while increases in furniture and clothing also pushed up annual inflation.
‘These large rises were slightly offset by petrol prices, which despite being at record levels were stable this month, but rose this time last year.
‘The closures in the economy last year have impacted some items but, overall, this effect on the headline rate of inflation is negligible.’
Household finances are being squeezed across the board as gas and electricity tariffs have also seen staggering rises.
The soaring cost of living means Brits have seen rises in their pay packets lag behind inflation for the first time in more than a year.
Average wage growth, including bonuses, rose by 4.2% in the three months to November.
With inflation hitting an eye-watering 5.1% in November, and 5.4% in December, this means that real wages failed to keep up with the rising cost of living for the first time since July 2020.
Labour’s Shadow business secretary Jonathan Reynolds said there is a ‘triple whammy’ facing families.
He told BBC Radio 4’s Today programme: ‘You’ve got real wages and incomes, even for pensioners, falling because of inflation.
‘You’ve got substantial tax rises. You’ve got huge rises in energy bills.
‘It is our job to hold the Government to account and that it exactly what we’re doing, and we’re laying out serious costed alternative positions to take that would make a real difference to people’s incomes.
‘Again, I think that is in a very positive contrast to a Government which doesn’t seem to be able to do anything other than try and defend itself.’
Ministers are being urged to take action ahead of a new energy price cap in April, which could push up bills for millions of families by 50%.
Martin Beck, chief economic adviser to the EY Item Club, said the fall in real wages was an ‘unwelcome development which is likely to worsen over the next few months’.
Some economists believe the Bank will hike interest rates again as soon as early next month to rein in rampant inflation, hot on the heels of its December rise from 0.1% to 0.25%.
James Smith, an economist at ING, said: ‘At face value, the UK jobs market looks much like it did pre-pandemic.
‘Taken with rising headline inflation, that makes a February rate hike look more likely.’
Armed Forces minister James Heappey said on BBC Breakfast today that the rise in inflation was a ’cause for real concern’.
He said: ‘The Government is looking at what more could and should be done.
‘I don’t know that viewers are necessarily learning anything new this morning because they would have seen the cost of their bills increasing over the course of the last few months, but it is a headline that reminds all of us in Government that there are millions of people out there who are concerned about their ability to heat their home, feed their families.
‘That’s why the Chancellor and the Business Secretary and the Prime Minister are looking at what the Government could and should be doing to help them.’
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