Inflation raced to a new 30-year high last month as the spiralling cost of daily essentials tightened the cost of living squeeze for millions of households.
The Consumer Prices Index (CPI) — the headline measure of inflation — shot up from 6.2 per cent to 7 per cent, a level not exceeded since March 1992. The rise was higher than the City expected and makes it more likely that interest rates will go up again when the Bank of England’s Monetary Policy Committee next meets in May.
Surging energy bills and forecourt pump prices, and higher supermarket and clothing prices were all responsible for the surge in the cost of living, according to the Office for National Statistics (ONS). Even with the increase there were warnings that today’s rise only represents the “calm before the storm” before April’s 54 per cent rise in the energy bill cap feeds through to the CPI calculation. Remarkably, inflation stood at just 0.7 per cent as recently as March 2020, making the rise over the last two years the fastest acceleration in the CPI on record.
Chancellor Rishi Sunak on Wednesday blamed “global pressure in our supply chains and energy markets” for the latest rise and warned they could be “exacerbated further by Russian aggression in Ukraine.”
He added: “I know this is a worrying time for many families which is why we are taking action to ease the burdens by providing support worth around £22 billion in this financial year, including for the most vulnerable through our household support fund. We’re also helping as many people as possible into work - the best way for families to gain economic security in the longer term.”
The inflation data came the day after official figures showed wages lagging inflation with rises in basic pay averaging just four per cent.
A detailed breakdown showed that energy bills made the biggest contribution to the rise, with electricity up 19.2 per cent and gas 28.3 per cent year on year following the 12 per cent rise in the cap in October 2021.
Fuel prices were 30.7 per cent higher in March than a year previously following huge rises in the cost of filling up over the winter. A monthly rise of almost 10 per cent in March was a record.
Clothes prices went up by 9.7 per cent, the fastest rate on record, while food and drink were 5.9 per cent more expensive, the biggest rise since September 2011.
The two per cent month on month increase in restaurants and hotels prices was the largest since records began in 1988,
Jack Leslie, Senior Economist at the Resolution Foundation think-tank, said:“With ONS data yesterday showing that wages are not keeping pace with rising prices, Britain’s cost-of-living crisis – on track to big the biggest squeeze since the mid-70s – will continue to worsen before it starts to ease at some point next year.
“The sheer scale of this inflation-led squeeze on living standards makes it all the more remarkable how little support the Chancellor provided in his Spring Statement – a decision that will surely have to be revisited before the Autumn Budget.”
Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said: “Today’s inflation figures will only add to the mounting pressure on households, with many already buckling under the strain of rising costs.
“One in eight UK adults say they have already gone without heating, water or electricity in the last three months. With energy, food and fuel price rises showing no signs of easing, and National Insurance increases hitting pay packets for the first time this month, there is no respite in sight.
“Urgent action is needed to prevent more people facing impossible choices trying to meet basic needs, and at risk of an increasing burden of debt.
“Raising benefits above Monday’s 3.1 percent increase, would be a good start, along with more targeted support for people struggling with household bills.”
Jamie Rackham, founder of UK Facebook group, Not on Amazon, which has 190k members: “For inflation to hit seven per cent is absolutely devastating to millions of people and small independent businesses. People feel cast adrift by the Government, which is doing nowhere near enough to support them, while at the same time letting giant corporations avoid paying the taxes they should.
“Many of our members feel totally abandoned, with prices of raw materials, energy and their own living costs rising at an unprecedented rate. In the meantime, big businesses, which can afford to slash their prices, get bigger and the small independents are squeezed like never before. The post-pandemic financial crisis is really starting to take hold.”
