UK inflation has increased to 5.5 per cent, the highest in nearly three decades, as the cost-of-living crisis intensifies.
The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation reached 5.5 per cent in January, up from 5.4 per cent in December and remaining at the highest level since March 1992, when it stood at 7.1 per cent.
The ONS said the cost of clothes and footwear pushed inflation higher last month, with the lowest January discounts in shops since 1990.
But inflation is soaring across the economy, with CPI already more than double the Bank of England’s 2 per cent target and expected to hit 7.25 per cent in April – the highest level since August 1991.
Rising energy prices and fuel costs have been the biggest factors in driving inflation up to near 30-year highs, though food and drink prices and many everyday essentials have also been on the rise.
Grant Fitzner, chief economist at the ONS, 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 rising costs of some household goods and increases in rents also pushed up inflation.
“However, these were partially offset by lower prices at the pump, following record highs at the end of 2021.”
The Bank hiked interest rates earlier this month to 0.5 per cent in the first back-to-back increase since 2004, signalling more increases are on the way as it looks to rein in rampant inflation.
It has warned over the worst-hit to household finances for at least 32 years, forecasting that disposable incomes, post tax and inflation, will fall by around 2 per cent in 2022.
Britons are facing a triple whammy threat this spring, with Ofgem hiking its annual energy price cap by nearly £700 in April on top of widespread inflation due to recent supply chain pressures and the Government’s national insurance increase.
Figures on Tuesday revealed salary rises are already lagging behind inflation, with total pay growth up by 4.3 per cent for the quarter to December, far below CPI.
Chancellor Rishi Sunak has so far resisted growing calls for his tax rise to be postponed, instead offering support including a state-funded £200 discount on energy bills in October, which households will need to repay eventually.
Mr 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 inflation figures showed that clothing and footwear prices fell by 2.9 per cent month-on-month in January, but the traditional discounts were far lower than a year earlier, when prices fell 4.9 per cent.
Fuel prices remained eye-watering, with average petrol prices standing at 145.1p a litre last month, but eased back slightly from the records seen in November and December.
The data also showed that the Retail Prices Index (RPI) measure of inflation remained at its highest level since March 1991 – hitting 7.8 per cent last month, up from 7.5 per cent in December.
CPIH, which includes owner-occupiers’ housing costs and is the ONS’s preferred measure of inflation, was 4.9 per cent in January compared with 4.8 per cent in December.
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