Rising inflation puts Britain on course for deepest living standards squeeze in six decades

Commenting on the latest ONS inflation data for January, which saw CPIH inflation rise to 4.9 per cent, its highest level in 30 years, and CPI inflation rise to 5.5 per cent, Jack Leslie, Senior Economist at the Resolution Foundation, said:

“Inflation continued to tick up at the start of the year, putting ever more pressure on family budgets.

“But just as it’s unclear the extent to which wages will respond to these price pressures, there’s also uncertainty over the level at which consumer inflation will peak as factory-gate inflation continues to rise too.

“Today’s increase is consistent with the Bank’s view that inflation will surpass seven per cent this Spring, which could drive the deepest squeeze on living standards in six decades.”

In it’s latest Monetary Policy Report, the Bank of England forecast real household disposable incomes (RHDI) to fall by 2 per cent in 2022 – the sharpest annual fall since records began in the late 1940s.