Inflation stayed stuck in double figures in March dashing hopes of an early end to the cost of living crisis in a major blow to hard pressed shoppers.
The Consumer Prices Index stood at 10.1 per cent last month - down from 10.4 per cent in February - the seven month on the trot it has been in double digits.
The announcement from the Office for National Statistics (ONS) will come as a serious setback to Rishi Sunak’s pledge to halve inflation by the end of the year.
The UK’s rate of inflation is the third highest in the G20 group of leading economies behind only Argentina and Turkey. Inflation in the US fell to just 5 per cent last month while across the EU prices rises average 6.9 per cent.
City economists had been forecasting a fall to 9.8 per cent in March followed by a bigger drop in April as huge spikes in fuel and energy costs fall out of the year on year comparison.
But Wednesday’s ONS data shows that stubbornly high food and drink costs, which rose 19.2 per cent, the highest rate since August 1977, have kept the overall rate above 10 per cent again. Bread and cereals rose 19.4 per cent, while there was also big rises in the prices of fruit, chocolate and confectionery and meat.
Chancellor of the Exchequer Jeremy Hunt said: “These figures reaffirm exactly why we must continue with our efforts to drive down inflation so we can ease pressure on families and businesses.
“We are on track to do this – with the OBR forecasting we will halve inflation this year - and we’ll continue supporting people with cost-of-living support worth an average of £3,300 per household over this year and last, funded through windfall taxes on energy profits.”
Rachel Reeves MP, Labour’s Shadow Chancellor, responding to the figures, said:“The question for families remains as real as ever - when will they feel better off under this Conservative government?
“And, why when the cost of living continues to bite, is the government refusing to freeze council tax this year, paid for by a proper windfall tax on oil and gas giants?
“The reality is that under the Tories our economy is weaker, prices are out of control and never have people paid so much to get so little in return.
“Labour will stand with working people and with our mission to secure the highest sustained growth in the G7, make families across every part of our country better off.”
The CPI’s refusal to ease significantly despite 11 consecutive interest rate hikes means that yet another increase in the cost of borrowing is on the cards when the Bank of England’s Monetary Policy Committee meet next month. The rate is expected to go up from 4.25 per cent to 4.5 per cent.
The data comes after the ONS said regular pay fell by 2.3 per cent in real terms in the three months to February. Living standards have been falling in real terms for 15 months.
