Cost of living crisis: Prices rise at fastest pace for 30 years

19 January 2022, 07:47 | Updated: 19 January 2022, 08:37

The rate of inflation has rocketed to its highest level for nearly 30 years
The rate of inflation has rocketed to its highest level for nearly 30 years. Picture: Alamy

By Asher McShane

Britain's rate of inflation has shot up to its highest level for nearly 30 years as the cost-of-living crisis intensifies, according to official figures.

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%.

Most economists had expected inflation of 5.2% in December.

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.

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The rising cost of petrol and second-hand cars also contributed to December's increase, alongside household costs, especially gas and electricity bills.

Household finances are being squeezed across the board as gas and electricity tariffs have also seen huge rises, with the Bank of England forecasting inflation to hit 6% in April.

The Bank hiked interest rates last month, from 0.1% to 0.25%, to try and cool rampant inflation and many experts expect 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 closures in the economy last year have impacted some items but, overall, this effect on the headline rate of inflation is negligible."

Dr Jackie Mulligan, expert on the Government’s High Streets Task Force and founder of the local shopping platform, Shopappy, said: “After two years of unprecedented disruption, our high streets are now being savaged by the highest inflation in three decades.

"Inflation is hitting small high street businesses from all angles.

"Customers have less to spend, raw materials are costing more, supply chains are being squeezed, interest rates are on the up and the cost to heat their premises is skyrocketing.

"It's a panoply of pain."