The latest inflation data released by the Office for National Statistics (ONS) has seen the Consumer Prices Index (CPI) reach a 30-year high of 5.5%.
The latest rises in inflation represent the fastest growth in prices for consumer goods since March 1992, when, based on historical modelling, the CPI reached 7.1%. The January CPI figure is also an increase on the 4.9% rate of price growth recorded in December 2021.
The CPI measures the change in prices of a range of typical goods and services purchased by UK households over a 12 month period, including housing and utilities, food and drink, transport, clothing, furniture and hospitality such as hotel rooms and restaurant spending.
While costs have fallen for consumers in some areas, particularly on alcohol and hospitality, rising costs of energy have been the main driver of the record high inflation for households, with gas prices on the global market reaching record highs. The cost of fuel had dipped in January compared with the record high prices seen at the end of 2021, but overall transport costs also edged up as prices for second-hand vehicles rose in response to global supply chain pressures that have hampered the supply of new cars. Traditional January sales on items such as clothing have also not seen as heavy discounting as in previous years as the retail sector looks to recoup losses from poor pandemic trading.
Price rises are unfortunately set to continue over the coming months, putting further pressure of consumers and businesses alike. The Bank of England expects inflation to continue to rise in the coming months, peaking at 7% in April when Ofgem price caps on energy costs are set to rise in response to wholesale prices.
Grant Fitzner, chief economist at the ONS commented:
“Inflation ticked up again in January, reaching a near 30-year high.
“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.
“Some annual changes this year are affected by last year’s lockdown, when many services were unavailable.”