Inflation measured by the consumer price index (CPI) increased slightly in January, from 5.4% in December 2021 to 5.5%.
This set a record 12-month inflation rate since records began in 1997 for the second consecutive time and, extrapolating backwards from there, it is the highest reading since March 1992, when inflation reached 7.1%.
Earlier this month, when the Bank of England (BoE) raised the benchmark rate from 0.25% to 0.5%, it said it estimated inflation would reach “around” 7.25 % by April this year.
The main drivers this month were higher prices for clothing and footwear, which rose by 0.14 percentage points between December 2021 and January this year.
Although inflation has risen, IX Prime chief executive Jay Mawji said the latest report from the Office for National Statistics “was greeted with a wave of relief”.
He compares this “modest increase in headline inflation” against a backdrop of “fuel prices at an all-time high and the UK economy heading into a spiral of soaring prices and slowing spending”.
Mawji continues: “The question now is whether this is a brief respite or a sign that inflationary pressure is easing. So far, the consensus is for the former, with the BoE predicting that the CPI will hit 7% in the spring.
“Compared to the United States, where consumer prices rose 7.5% in the 12 months to the end of January – the fastest rate of inflation in the United States for four decades – the United Kingdom got off lightly.
“But the relief may not last long,” he warns, citing falling wages and the “growth-stifling” effect of this inflation.