UK inflation jumped to 5.4 per cent in December, its highest rate in 30 years, deepening a cost of living crisis that is squeezing household incomes and putting further pressure on the Bank of England to raise interest rates.
The rise in the consumer price index again exceeded economists expectations, and is set to increase significantly further in the spring when gas and electricity prices are expected to jump in April by up to 50 per cent.
The rate in December exceeded peaks of 5.2 per cent in 2011 and 2008, and hit a rate not seen in the UK since early 1992 when inflation was coming down from a peak of 8.4 per cent.
Prices in December were rising significantly faster than earnings, squeezing incomes, with the latest headline rise in wages at an annual rate of only 3.8 per cent in the three months to November.
The Office for National Statistics said that the increase in inflation was broad based, and pushed higher by rises in food prices, restaurant bills and the rising cost of hotels, furniture, household goods, clothing and footwear in the run up to Christmas.
Grant Fitzner, ONS chief economist, said there was little evidence that the coronavirus restrictions were pushing prices up. “The closures in the economy last year have impacted some items but, overall, this effect on the headline rate of inflation is negligible,” he said.