The UK's rate of inflation has reached its highest level for nearly 30 years, as the cost-of-living squeeze intensifies.
The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation jumped from 5.1% in November to 5.4% in December – the highest since March 1992, when it stood at 7.1%.
The ONS said inflation was pushed higher by food and non-alcoholic drinks prices last month, with costs also rising for restaurants and hotels, furniture and household goods, as well as clothing and footwear.
Household finances are being squeezed across the board, as gas and electricity tariffs have also seen staggering rises and supply chain problems are pushing up costs across the economy.
The Bank of England has forecast inflation to hit 6% in April.
Policymakers raised interest rates last month, from 0.1% to 0.25%, to try to cool rampant inflation, with experts expecting another rise possibly as soon as early next month.
Grant Fitzner, chief economist at the ONS, said: “The inflation rate rose again at the end of the year and has not been higher for almost 30 years.
“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 figures come amid mounting pressure on the UK Government to help with rises in gas and electricity bills, with fears that many vulnerable people are choosing between heating their homes and buying food.
Chancellor Rishi Sunak said: “I understand the pressures people are facing with the cost of living and we will continue to listen to people’s concerns, as we have done throughout the pandemic.”
SNP Shadow Chancellor Alison Thewliss responded: “Rishi Sunak must spend less time plotting his Tory leadership bid - and more time delivering the urgent help families need to get through the months ahead.
“The Chancellor must deliver an emergency financial package to help families by reversing Tory cuts to Universal Credit, delivering a low income energy payment, matching the Scottish Child Payment UK-wide, and introducing a real living wage.”
The ONS figures also showed that the Retail Prices Index (RPI) measure of inflation soared to its highest level since March 1991 - hitting 7.5% last month - up from 7.1% in November.
Food and drink prices lifted by 4.2% year on year in December, which is the biggest rise since September 2013. Clothes shops also put up prices by an average 4.2%.
But the biggest hit to consumer pockets continues to be the rises in energy bills after an October increase to the price cap, with warnings over these costs more than doubling when the next revision is due in April.
Meanwhile, motorists have also faced painful fuel price rises, and the ONS said average petrol prices remained at a record high of 145.8 pence a litre last month, compared with 114.1 pence a litre a year earlier.
Rising used car prices have been another factor in pushing up CPI since the beginning of 2020, according to the ONS.
The figures showed that CPIH, which includes owner-occupiers’ housing costs and is the ONS’s preferred measure of inflation, was 4.8% in December compared with 4.6% in November and the highest since September 2008.
Meanwhile, house prices surged by 10% annually in November, up from 9.8% growth in October.
The average UK house price was £271,000 - £25,000 higher than a year earlier - the ONS stated.
In Scotland, the average house price hit a record level of £183,000 in November. Property values increased by 11.4% over the year, accelerating from 11% growth in October.
Phillip Stevens, director of estate agent Antony Roberts, said: “The interest rate rise does not appear to have dented buyers’ confidence thus far, nor their ability to purchase property, but with inflation at a 30-year high that could change.”
Guy Gittins, chief executive of Chestertons, added: “Due to demand outstripping supply, we have seen properties being snapped up much faster compared to previous years.”
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