Britain’s cost of living squeeze intensified further last month, as figures from Office for National Statistics (ONS) revealed today (23) showed that consumer prices rose by 6.2 percent year-on-year in February, highest rate since March 1992.
Released ahead of Chancellor Rishi Sunak's spring statement, ONS figures highlighted household energy bills - up almost 25 percent on a year ago - and petrol as the biggest drivers of February's price jump.
In a blow to poorer households, the ONS said food prices were rising across the board, unlike in normal times when some prices typically go up and others fall.
Yael Selfin, chief economist at KPMG UK, said the figures would also put pressure on the Bank of England to keep on raising interest rates, but she said it was still likely that price growth would peak before long.
"Provided inflation expectations can be managed and global commodity prices stabilise by next year, we should see inflation returning to the Bank of England's 2% target by mid-2024," Selfin said.
Responding to the latest CPI inflation figures, Helen Dickinson, Chief Executive of the British Retail Consortium (BRC), said: “Rising inflation remains a significant concern for the economy, squeezing household incomes and increasing cost pressures on retailers. For the second month in a row, Transport saw the highest rate of inflation this month, while food inflation rose slower than the headline rate.
"The BRC’s Shop Price Index, which tracks the price of basic goods, showed an even smaller price rise in food, suggesting that retailers are successfully managing to limit cost increases for many essential groceries. Many supermarkets have expanded their value ranges to support individuals and households on lower incomes. Nonetheless, with retailers struggling to absorb these higher costs, shop prices look set to rise in the coming months.
“The situation in Ukraine is undoubtedly exacerbating existing cost pressures in the supply chain – from increased energy costs to higher global commodity prices. Many households will also face far higher energy bills and NI contributions from next Friday.
“As a result, all eyes will be on today’s Spring Statement, to see if the Chancellor will announce any relief for those families most affected by the cost of living squeeze,” Dickinson said.
Inflation has shot up faster than expected last month to hit a new 30-year high, worsening a historic squeeze on household finances.
Britain now has the second-highest annual inflation rate among Group of Seven countries, behind only the United States as global commodity and energy prices soar, exacerbated by Russia's invasion of Ukraine.
