Inflation has soared to a new 30-year high of 7%, official data confirmed today.
Office for National Statistics data showed prices rose annual by an average of 7% in March. Economists had predicted inflation would rise to 6.7%, up from 6.2% in February.
The ONS said rising energy bills and fuel costs were largely behind the forecast-busting rise. Average petrol prices stood at 160.2 pence per litre in March 2022, compared with 123.7 pence per litre a year earlier.
March’s reading is a fresh 30-year high, topping the record set in February. Last month was the first period captured the economic effects of war in Ukraine, which has sent the price of oil and gas soaring and disrupted the supply of goods like sunflower oil and grains.
The data comes a day after separate figures showed most people’s earnings are failing to keep pace with inflation. Pay excluding bonuses rose by 4% in February, which amounts to a 1% cut to real income.
Inflation is set to get worse as disruption from the war continues and the impact of the new energy price cap, which came into force at the start of the month, kicks in. Think tank the Resolution Foundation said earlier this month that 2.5 million people could be tipped into “fuel stress” by the increase in the price cap.
Alpesh Paleja, lead economist at the Confederation of British Industry, said: “The latest rise in inflation will not be the last. We’ll see another jump over April, as the rise in Ofgem’s energy price cap comes into effect.
“Beyond this, volatility in global commodity prices and ongoing supply chain disruption will continue to stoke price pressures. The result will be even higher costs for businesses, and a deep squeeze in the cost-of-living for households.”
The Bank of England expects inflation to peak at more than 8% in the coming months, while some City economists think price rises could hit 10%.
Brits are set to see a £1,000 drop in real incomes this year, according to estimates.
Today’s data will pile more pressure on the Chancellor to go further in addressing the cost of living crisis. Businesses, think tanks, consumer groups and politicians from across the political spectrum have all urged Rishi Sunak to offer more support for the lowest income households.
Sunak said today: “We’re seeing rising costs caused by global pressures in our supply chains and energy markets which could be exacerbated further by Russian aggression in Ukraine.
“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.”
Inflation is soaring around the world. On Tuesday, official data confirmed price rises hit a 40-year high of 8.5% in the United States in March.
