UK inflation has jumped to a 30-year high of 5.4 percent as the cost of living crisis deepens in Britain. The price of everyday essential goods rose to new levels in December, as official figures show the rising rate means pay rises have been all but wiped out for British workers.
Grant Fitzner, chief economist at the Office for National Statistics (ONS), said: “The inflation rate rose again at the end of the year and has not been higher for almost 30 years.
“Food prices again grew strongly while increases in furniture and clothing also pushed up annual inflation.
“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.
“The closures in the economy last year have impacted some items but, overall, this effect on the headline rate of inflation is negligible.”
Inflation is expected to stay above five percent, given the energy price cap rise announcement due in February.
Weekly earnings, excluding bonuses, rose by 3.8 percent in the three months to November, in comparison to the same period in 2020.
In November alone, workers took a real-terms pay cut of one percent.
The last time the UK witnessed a real-terms fall in wages was in mid-2020, as pay was affected by the coronavirus pandemic, and millions went onto the furlough scheme.
“I don’t know that viewers are necessarily learning anything new this morning because they would have seen the cost of their bills increasing over the course of the last few months, but it is a headline that reminds all of us in Government that there are millions of people out there who are concerned about their ability to heat their home, feed their families.
“That’s why the Chancellor and the Business Secretary and the Prime Minister are looking at what the Government could and should be doing to help them.”
Jack Leslie, Senior Economist at the Resolution Foundation, said: “Rising inflation means that Britain’s cost of living squeeze will continue to get tighter over the coming months, particularly when energy bills jump in April.
“Periods of sustained inflation over five percent will be a new experience for new millennials and Generation Z, and a throwback to older generations who remember the 1980s.
“However, the impact of high inflation in terms of shrinking pay packets is becoming wearily familiar to younger workers, who have already experienced three sustained periods of falling real wages in their short careers.”