Inflation hit a 30-year high of 5.5% in January according to the latest figures as the cost of living crisis continues.
The Consumer Price Index was at 5.5%, slightly higher than City forecasts of 5.4% but economists are warning that worse is yet to come.
It’s the highest reading since March 1992 when inflation stood at 7.1%, and up from 5.4% seen in December. It also pushes inflation even further beyond the BoE’s 2% target.
Transport costs were a big factor, as prices rose as people returned to offices.
Diesel prices hit new highs last Friday (AA), food price inflation almost doubled in January to 2.7%, its highest in a decade (British Retail Consortium) and used car prices were up 31.3% in the year to January (Auto Trader).
And the squeeze is set to escalate in the Spring when the energy price cap is lifted by 54%, and national insurance contributions rise.
With that in mind the BoE has already warned that consumer price inflation could peak at about 7.25% by April as energy prices surge.
The latest figures make another rise in interest rates in February a near certainty.
Speaking earlier this week in anticipation of the figures Sarah Coles, senior personal finance analyst, Hargreaves Lansdown, said: “We’re all well aware of the cost-of-living crisis crushing our finances harder with every passing day.
“However, at the same time, there’s a far more subtle squeeze underway, as inflation wrings the spending power out of our savings.
“We’re already facing the toughest spending squeeze for decades, and things are likely to get worse before they get better.”
