Cost of living crisis worsens as inflation reaches 30-year high
The rise was higher than the 6.7% predicted by analysts
Last updated 13th Apr 2022
The cost of living crisis is continuing to bite, with the rate of inflation rising to levels not seen in 30 years.
In March, the Office for National Statistics (ONS) found that the rate of inflation had found that inflation had soared to 7%, well above the predicted 6.7%.
This is now the highest rate of inflation the UK has faced since March 1992, when inflation peaked at 7.1%.
The Bank of England has estimated that the rate of inflation is set to peak at 8% in April, once energy costs are factored into the economic statistics.
The ONS, along with the Consumer Prices Index (CPI), put the rise in inflation down to the rise in fuel costs, as well as prices at restaurants and supermarket, in yet another blow for householders.
Prices for petrol reached and average of 160.2p per litre, whilst the cost of diesel also had risen to the average of 170.5p, both of which at unprecedented highs.
The price of cooking oils has also skyrocketed by 7.2%, adding to a total rise of 18% in the past year, made worse by the war in Ukraine, which is the world's leading producer in cooking oils.
As a result, this means that household costs are now 6.2% higher than when they were in March 2021.
However, the rise in inflation in March does not take into account the 54% hike in energy bills, which came into effect with the rise in the price cap - introduced on April 1st.
Speaking on the figures, Chancellor Rishi Sunak said the government is trying to support those who need financial help.
"We're seeing rising costs caused by global pressures in our supply chains and energy markets which could be exacerbated further by Russian aggression in Ukraine," he said.
But Jack Leslie, senior economist at the Resolution Foundation think tank, warned that the worst is yet to come.
"With ONS data yesterday showing that wages are not keeping pace with rising prices, Britain's cost-of-living crisis - on track to be the biggest squeeze since the mid-70s - will continue to worsen before it starts to ease at some point next year," she said.
Where the cost of living crisis is hitting hardest:
Interest rates and inflation go up
Inflation rose by 8.8% in the 12 months to January 2023, down from 9.2% in December 2022. With interest rates also rising to 4%, those saving money will earn more interest on their finances, whilst those paying mortgages would pay more interest to the bank.
Energy bills
The price of energy went up incredibly as the cost of living crisis hit, with the gas price spike caused largely by the war in Ukraine. The price cap - which is set by an independent regulator to help offset costs onto customers - was set to rise to £3,549 for an average home in October but a price freeze from the government restricted the typical bill to £2,500. That's still an increase of 27% from the previous energy cap and as it's a cap on unit cost, the more energy you use the higher your bill will be.
Food prices
The cost of a weekly shop also has gone up as a result of the cost of living crisis. As a result of the war in Ukraine, a number of products including cooking oils and wheat have been disrupted. This means that several products are now considerably more expensive, driving bills up for customers.
Prices at the pumps
The average cost of petrol has also rose to unprecedented levels. Supply lines for petrol have been thrown into doubt as a result of the war in Ukraine, as Russia is a large export partner for gas, oil and fuel. In April 2022, the average price for a litre of petrol on the forecourt was 160.2p, whilst a litre of diesel would cost 170.5p. By late June 2022 the price had risen to an average of 190.9p for a litre of unleaded and 198.9p for a litre of diesel. In March 2023 the price wass on average of 147.03 in petrol and 167.04 in diesel.
Average cost of filling up a car with petrol hits £100
On 9th June 2022, the average cost of filling up a car with petrol hit £100 for the first time ever. Diesel had already hit that milestone. It comes as the cost of fuel hit a record high of one pound eighty a litre. The 2p rise was the biggest daily jump in 17 years. Prices have dropped by at least 20p per litre since the high point.