INFLATION hit a fresh 30 year high in January, putting more pressure on family finances and on the Bank of England.
Official figures show the Consumer Price Index was at 5.5%, slightly higher than City forecasts of 5.4%. It was last higher in March 1992, when it stood at 7.1%.
Worse is to come, warn economists. The Bank of England expects inflation to peak above 7% in the coming months as a big rise in the energy price cap kicks in.
Transport costs were a big factor in January’s inflation figure, as prices rose just as people returned to offices. Retails offered fewer sales than they usually do in January, which saw clothing costs rise.
ONS chief economist Grant Fitzner said: “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.”
The inflation figure will increase pressure on the government to do more to address the ongoing cost of living crisis.
Chancellor of the Exchequer, Rishi Sunak said: “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.”
The latest figures make another rise in interest rates in February a near certainty.
Rachel Winter at Killik & Co said: “Inflation has the economy in a chokehold, with prices skyrocketing and consumers feeling significant pressure on their household budgets.”
Hinesh Patel at Quilter Investors said: “While we face inflationary pressures not seen for decades, worse is yet to come. The Bank of England expects CPI inflation to peak around 7.25% in April, though the Bank has so-far underestimated the extent of inflation in previous forecasts.”
