The UK’s consumer price index rate jumped to 5.4 percent in the month of December – its highest rate since March 1992, fresh data put out by the Office of National Statistics Wednesday shows.
The figures are above the BoE’s forecast of 5.2 percent and higher than November’s CPI rate showing of a 5.1 percent bump.
Inflation hits the pocketbooks of producers and ordinary Britons alike, with prices on everything from food and clothing to gas, electricity and petrol, used cars, furniture, household goods, and restaurant and hotel bills edging upwards.
Economists expect the BoE to raise interest rates try to get inflation back into line with the Bank’s 2 percent target, but caution
against too much of a hike too fast, which might dent economic recovery. The Bank recently raised the base interest rate from 0.1 percent to 0.25 percent.
The BoE expects things to get worse before they get better, forecasting a CPI hike to 6 percent in April – when gas and electricity bills are expected to shoot up by 50 percent after a government energy price cap is lifted. The global supply chain crisis has impacted the availability of goods, and shortages of some categories of workers have also meant higher transportation costs – which businesses typically pass on to consumers.
Earlier this week, the Resolution Foundation, a London-based standard of living think tank, warned that the number of households spending above 10 percent of their budget on energy could treble to 6.3 million once the new energy price cap kicks in on 1 April.