Calls for support as inflation hits 30-year high
Prices rose by 7% in the 12 months to March, their fastest rate for 30 years and up from 6.2% in February.
The increase was mainly a result of the rise in fuel costs caused by the war in Ukraine, with pump prices having risen 10% between February and March.
But there was also upward pressure from a range of other categories that caused core inflation to reach 5.7%.
The cost of living continues to outstrip wage growth, putting further pressure on the government to do more to help struggling households.
Prices could hit 8% this month after the energy price cap was increased, driving up gas and electricity bills.
Labour’s Pat McFadden, the shadow chief secretary to the Treasury, said: “The cost of living is hitting households hard. Not only are energy prices up, the Government is imposing tax rises. And as today’s rising inflation figures show, prices on everyday items are up too.
“Labour has a plan to cut energy bills through a one-off windfall tax on oil and gas producer profits. Meanwhile, the Chancellor has increased taxes for working people to their highest levels in 70 years.”
Alpesh Paleja, CBI lead economist, said rising prices emphasises the need for more investment in green energy.
“The latest rise in inflation will not be the last. We’ll see another jump over April, as the rise in Ofgem’s energy price cap comes into effect.
“The result will be even higher costs for businesses, and a deep squeeze in the cost-of-living for households.
“The energy-centric nature of inflationary pressures highlights the need to double-down on investment in green energy.”
Martin Beck, chief economic adviser to the EY ITEM Club, said it expects the CPI rate to rise to at least 8.5%, caused by the 54% rise in the energy price cap and the VAT rate for the hospitality sector being restored to 20%.
“That should represent the peak, with some sizeable base effects then set to come into play,” he said. However, with the war in Ukraine potentially helping to keep food and oil prices elevated for a prolonged period, and another rise in the energy price cap on the cards for October, inflation will be slow to fall back.
“Over 2022 as a whole, the EY ITEM Club expects CPI inflation to average close to 7%, which will the key factor behind the tightest squeeze on household finances for several decades.
“But the EY ITEM Club does expect energy prices to belatedly fall back next year and the pressures on global goods prices caused by supply bottlenecks should also fade.
“After some high readings for inflation this year, the pace of price rises could head well below the Bank of England’s 2% target in late 2023 and early 2024.”