UK inflation reaches highest level in 30 years but tax rises will still go ahead in April

16 February 2022, 08:25 | Updated: 16 February 2022, 10:07

Consumer prices rose by 5.5% in the 12 months to January.
Consumer prices rose by 5.5% in the 12 months to January. Picture: Alamy

By Patrick Grafton-Green

Inflation in the UK hit its highest level since March 1992 last month as the cost of living continues to surge, official figures show, but tax hikes will still go ahead.

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Consumer prices rose by 5.5% in the 12 months to January, up from 5.4% in December, the Office for National Statistics show.

The ONS said the cost of clothes and footwear pushed inflation higher, with the lowest January discounts in shops since 1990.

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This is more than double the Bank of England's 2% target.

The Bank hiked interest rates earlier this month to 0.5% in the first back-to-back increase since 2004, signalling more are on the way as it looks to rein in rampant inflation.

It is forecasting that inflation will soar further due to painful energy price rises before peaking at 7.25% in April - the highest level since August 1991.

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."

Grant Fitzner, chief economist at the ONS, said rising costs of some household goods and increases in rents also pushed up inflation.

"Inflation ticked up again in January, reaching a near 30-year high," Mr Fitzner 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."