UK inflation hits 6.2% as Sunak delivers Spring Statement

UK inflation hits 6.2% ahead of Rishi Sunak's Spring Statement
UK households continue to face a deep cost of living crisis as inflation hit 6.2% in the 12 months to February. Photo: Tolga Akmen/AFP via Getty

The annual rate of inflation rose to 6.2% in the year to February, its highest level since March 1992, as UK households continue to face a sharp cost of living crisis.

According to new data from the Office for National Statistics (ONS) on Wednesday, February’s consumer price index came in above expectations, with economists polled by Refinitiv and Reuters both forecasting a figure of 5.9%.

This was above January’s previous 30-year high of 5.5%. On a monthly basis, CPI inflation was 0.8%, exceeding expectations for a 0.6% rise, and the biggest increase since 2009.

The biggest contribution came from soaring energy, fuel and food prices, while transport saw the highest rate for the second consecutive month.

Electricity prices jumped by 19.2% in the last year, while gas prices were 28.3% higher.

Average petrol prices were 147.6p per litre in February, compared with 120.2p per litre a year ago, while the average price of diesel was 151.7p, the highest on record, the ONS said.

UK inflation hit a fresh 30-year high on Wednesday. Chart: ONS
UK inflation hit a fresh 30-year high on Wednesday. Chart: ONS

"Clothing and footwear saw a return to traditional February price rises after last year's falls when many shops were closed,” Granny Fitzner, chief economist at the ONS, said.

"Furniture and flooring also contributed to the rise in inflation as prices started to recover following new year sales. The price of goods leaving UK factories has also been rising substantially and is now at its highest rate for 14 years.”

The data also revealed a rise in prices for second hand cars, while food and non-alcoholic beverages prices rose by 5.1% during the period.

Becky O’Connor, head of pensions and savings at Interactive Investor, said: “The spike in rises is sharp and steep — it’s almost vertical. A generation has grown up having never experienced price rises like this and the pain is far from over. Today’s figures did not account for the further impact of the war in Ukraine on price rises.

“Lifestyle changes alone aren’t going to cut it when it comes to minimising the pain: going out has become more expensive, staying in has become more expensive, basic foods even in the value ranges, are pricier."

Read more: UK facing worst cost of living crisis in 60 years

It comes as the chancellor prepares his Spring Statement and an outline of how he will help to combat inflationary pressures. He has pledged to help the hardest-hit families, adding to £21bn ($28bn) of measures already set out.

The Bank of England expects inflation to climb as high as 8% next month, well ahead of its 2% target, thanks to the 54% rise in the energy price cap that is set to come into force on 1 April.

Prices are currently rising faster than UK wages, and the Bank has further warned that inflation could even reach as high as double digits in the autumn when the energy price cap rises again.

Threadneedle Street has now increased UK interest rates three times up to 0.75% since December in a bid to combat rising inflation.

Read more: Can Rishi Sunak rescue the UK from a cost of living crisis?

“On the morning of chancellor Rishi Sunak’s Spring Statement, the UK has once again posted inflation numbers not seen for 30 years,” Paul Craig, portfolio manager at Quilter Investors, said.

“Many are already feeling the squeeze financially, yet there is no doubt much worse to come considering we are facing a major cost of living crisis alongside other fiscal pressures.

“All eyes will be on the chancellor today as he presents his spring statement and announces measures the government will take to tackle the ongoing cost of living crisis.

“This morning’s inflation data shows just how dire the situation is, and there is a clear need for the government to act to help save many from slipping into financial difficulty as their wages are quickly swallowed up.”

Watch: How does inflation affect interest rates?