Sunday, October 1, 2023

Inflation: Cost of living rises at fastest pace for 30 years

THE cost of living rose at its fastest pace in nearly 30 years in the 12 months to December, driven mainly by higher food and energy bills reports the BBC.

The UK’s Consumer Prices Index measure of inflation rose to 5.4% from 5.1% in November, the Office for National Statistics (ONS) said.

The last time inflation was higher was in March 1992, when it was 7.1%.

And with gas and electricity costs set to increase further soon, some analysts think it could reach that level again.

Increases in prices of furniture and clothing also contributed to December’s rise in the cost of living.

“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,” said ONS chief economist Grant Fitzner.

The rate continues to be well above the Bank of England’s 2% inflation target.

Inflation is the rate at which prices are rising. If the price of a bottle of milk is £1 and it rises by 5p, then milk inflation is 5%.

You may not notice price rises from month to month. But right now, prices are rising so quickly that the money people earn does not go as far.

Separate ONS figures issued on Tuesday showed that average pay rises are failing to keep up with the rise in the cost of living.

Regular pay, excluding bonuses and adjusted for inflation, fell 1% in November compared with the same month in the previous year.

Paul Johnson, director at the Institute for Fiscal Studies think tank, said people on low incomes would be particularly hard hit by the rises.

“Everyone, particularly those on modest incomes, has had a long period of wages not really growing any faster than prices over the last decade, so another increase at this point is going to be particularly painful,” he told the BBC.

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