More pressure on household finances as inflation hits 30 year high and soars to 5.4%

INFLATION has soared to 5.4% – up from 5.1% last year, according to new data from the Office for National Statistics.

It comes as wages have been seen to take a tumble with the average pay growth recorded at just 4.2% – far lower than the increasing inflation figures.

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As the rate is at its highest in 30 years, that only piles on more pressure on already struggling household finances.

Rising prices have already pushed up bills and created a cost of living crisis for millions of Brits.

Food, furniture and clothing prices surged as revealed in the latest data.

Plus prices are rising at a faster rate ever since the coronavirus pandemic.

The 5.4% peak is the highest 12-month inflation rate in the National Statistic data series, according to the analysts.

The last time it was any higher historically was in March 1992, when it stood at 7.1%.

The latest figure of 5.4% is up from 5.1% in November, 4.2% in October, 3.1% in September and 3.2% in August.

Despite the steep incline the number of people in work has risen, as revealed by parallel data that was released yesterday.

But the same can’t be said for what they’re being paid, so the higher cost of goods, bills and more is going to take its toll on families and households.

Lauren Thomas, Economist at Glassdoor said: “Inflation is eating away at wages at a brutal pace we haven’t seen for many years.

“Lower income workers are being hit particularly hard, especially as the cost of fuel and electricity rises.”

Further pressure on inflation is expected in just a few months time too, as in April, a new energy price cap could come in to force and see bills for millions of households hiked by another 50%.

Many households are already having to make the stark decision between heating and eating as they struggle with the costs.

Last month the Bank of England had to raise interest rates from 0.1% to 0.25%, so the new data may put pressure on yet another adjustment.

But it’s not only households that will take the brunt of the rising costs as businesses struggle with making a profit while remaining integral in the community.

Adam Bamford, co-founder at Derby-based Colleague Box said: “I absolutely hate raising our prices but the reality is we are being left with no choice.

“Our suppliers having to pay more for all aspects of production leads to daily emails of price increases that put even greater strain on our business.

“We’re not talking about profits any longer as it’s a fight to survive rather than make money.

“We are reviewing our prices again in February but it’s inevitable that we’ll be hurting our own customers further with prices rises as we have no other choice.”

This post first appeared on thesun.co.uk