EconomyNews

UK inflation hits 7% amid rising fuel costs

The price of goods have continued to rise ‘substantially’ in the UK, with metal and transport products both at record highs and food reaching its highest rate for over a decade

The annual rate of inflation has hit a new 30-year record with a rise of 7% in the 12 months to March 2022, up from 6.2% in February, with rising prices for motor fuels resulting in the largest upward contribution to the monthly rate.

According to the Office for National Statistics (ONS), this is the highest Consumer Prices Index (CPI) 12-month inflation rate in the National Statistics series, which began in January 1997. It is also the highest rate in the historic modelled series since March 1992, when it stood at 7.1%.

Additionally, the Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 6.2%, up from 5.5% in February.

The largest upward contribution to the CPIH came from housing and household services at 1.49%, primarily due to a surge in electricity, gas and other fuels, and owner occupiers’ housing costs.

Transport was the second upward contribution to the annual CPIH inflation rate in March 2022 which rose by 2.4% between February and March, principally due to motor fuels and second-hand cars.

Average petrol prices rose by 12.6 pence per litre between February and March 2022, the largest monthly rise on record since 1990. Similarly, diesel prices rose by 18.8 pence per litre this year, compared with a rise of 3.5 pence per litre a year ago.

However, in March 2021, the main upward contributions to the monthly rate came from clothing and footwear, and transport (principally motor fuels), partly offset by a downward contribution from food.

Additionally, rising prices for furniture and household goods led to an increase of 0.09% in the overall CPIH 12-month inflation as prices rose by 1.9% on the month in 2022, compared with a smaller rise of 0.8% a year earlier.

Grant Fitzner, ONS chief economist, said: “Amongst the largest increases were petrol costs, with prices mostly collected before the recent cut in fuel duty, and furniture.

“The price of goods leaving UK factories has continued to rise substantially with metal and transport products both at record highs and food reaching its highest rate for over a decade. Raw material costs also rose, with a notable increase in the price of crude oil.”

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