January’s inflation figures

Today’s UK inflation figures show cost-of-living increases that reach the highest rate for over 30 years.

The Office for National Statistics (ONS) reported that the consumer prices index (CPI) measure of inflation increased to 5.5% in January from 5.4% a month earlier, driven by prices for clothing, footwear, and furniture. All of these problems are multiplied by rising energy and fuel bills (which also feed into higher costs for a wider range of goods and services).

Once again, the rates have gone ahead of economists’ predictions. City forecasts were that the inflation rate would remain at 5.4%.

An alternative measure of inflation – one which unions have always pushed as being more relevant in calculating wage demands – is the retail prices index (RPI). This is now running at 7.8%, again, considerably higher than anticipated in last October’s budget.

The last time the UK had a higher rate of inflation was in March 1992, when it stood at 7.1%.

Whatever the measure, household living standards are facing a noticeable squeeze. One Guardian columnist sees this as point at which our relationship with consumer spending fundamentally changes.

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