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Inflation reached 5.4% in December, its highest rate since CPIH stood at 5.1% in May 1992, according to the latest figures from the Office for National Statistics (ONS).
It revealed the consumer prices index including owner occupiers’ housing costs (CPIH) rose 4.8% in the 12 months to December 2021, up from 4.6% in the 12 months to November.
In December 2021, the CPI rose by 0.5% from the previous month, compared with a rise of 0.3% in the same month the previous year.
The largest upward contributions to the December 2021 CPIH 12-month inflation rate came from housing and household services and transport.
It also reported the largest increase in the CPIH 12-month inflation rate between November and December 2021 came from food and non-alcoholic beverages, restaurants and hotels, furniture and household goods, and clothing and footwear – partially offset by large downward contributions to change from transport, and recreation and culture.
Independent research consultancy Capital Economics expects inflation to peak at 7% in April.
Paul Dales, chief UK economist at Capital Economics, said: “The largest contribution to the increase in inflation came from a rise in food price inflation from 2.4% to a nine-year high of 4.5%.”
Alpesh Paleja, CBI lead economist, said: “We’ve not seen the end of rising inflation yet. We expect it to peak in the months ahead, not least if, as expected, the energy price cap is raised.
“With prices on the rise and real wages already falling, it’s likely households will face a cost-of-living crunch for much of this year.”
He added: “And with price pressures further up the supply chain still strong, the cost of doing business will also continue to climb sharply.
“It’s now vital that the Government comes forward with urgent solutions to protect the most vulnerable consumers, who will struggle most with anticipated price rises. Solutions must also be found for firms that are struggling with ever-growing cost burdens, especially energy-intensive businesses. This should be a precursor to longer-term energy market reforms, to build resilience against future energy price shocks.”
