Inflation in the UK has soared to a 30-year high, the Office for National Statistics (ONS) has said. The latest figures reveal that it has risen by more than 6% in the space of a year.
The Bank of England expects that it will rise even higher over the coming months. But then it is anticipated that it will drop again to around 2% in two to three years’ time.
Consumer champion Martin Lewis, however, has issued a warning about what that will mean for people in the UK. The founder of the Money Saving Expert website has said recently that the current financial climate has left him ‘virtually out of tools’ to help people manage their money - adding that ‘political intervention’ is now needed.
What has Martin Lewis said about rising inflation?
Today, responding to the inflation rise, he posted on Twitter that even if it does drop, it doesn’t mean prices will go down to where they were before. He Tweeted: “Some govt ministers suggest high inflation mightn't be long term. Even if true that DOESN'T mean prices drop back to what they were.
“If a £100 trolley of groceries in 2021, costs £108 in 2022, lower inflation'd just mean it rises to eg £109 in 2023.” He added: “Look at energy predictions… Gas & elec bills are a big factor fuelling inflation. Here's the price cap for typical usage:
Oct 21-Apr 22: £1,277/yr
Apr-Oct 22: £1,971
Oct 22-Apr 23: strong prediction c£2,600
Apr-Oct 23: weak prediction c£2,300
“So it may drop next Apr, but still cost more than now!”
How is inflation measured?
In the UK, inflation is measured by the ‘Consumer Prices Index including owner occupiers’ housing costs’ - known as CPIH. This tracks the price movements of 650 items that represent a basket of goods and services bought by the average UK household.
The items tracked come under 12 categories, including food and beverages, housing and household services and transport. The basket is updated every year, with prices checked on a monthly basis.
According to the ONS, the CPIH rose by 6.2% in the 12 months up to March 2022, up from 5.5% in February. The ONS said: “The rate was last higher in the historic modelled estimates in February 1992 when it stood at 6.35.”
Fuel costs are the biggest contributor to rising inflation. Average petrol prices rose by almost 13p a litre between February and March, the largest monthly rise since records began in 1990.
Household bills have also soared - particularly since October when Ofgem increased the cap on energy prices. There has been an average rise of £693 a year in standard energy tariffs over the past 12 months.
What has the Bank of England said about rising inflation?
The Bank of England expects inflation to reach around 8% this spring, saying it could go even higher later in the year. But it believes inflation rates will ‘fall considerably over the next couple of years’.
It added: “That’s because we don’t expect these causes of the current high rate of inflation to persist. It’s unlikely that the prices of energy and imported goods will continue to rise as rapidly as they have done recently.
“This means that inflation will decline. And we expect inflation to be around our 2% target in two or three years’ time.”
