U.K. household inflation has hit a 30-year high, pushing up the cost of everyday items and threatening to erode most of the country’s wage increases. The Consumer Price Index measure of inflation hit 2.9% in February, the highest level in three decades. The last time inflation was this high was in February 1985, when it reached 3.1%. Economists say the high inflation is a sign of the economy overheating, leading the Bank of England to raise interest rates faster.
After work, Nicola Frape turns off the heating and covers herself under a blanket with her daughter and a hot water bottle. She says these layers cost nothing but leaving the boiler on drains her bank account.
Treats such as theater tickets have been discarded from her list as the 38-year-old care worker’s food and fuel bills rise.
Frape is one of the millions of usually financially comfortable Britons facing a cost-of-living crisis. Accelerating inflation is driven by soaring energy bills while tax increases kick in this year.
The price of everything from bread to cars has been rising faster than wages for years. When the Bank of England says the cost of living has been increased by more than at any time in the past 30 years, you can be sure it’s affecting more than your bank balance. And when the Bank of England says the impact on living standards will be the biggest one-year fall in disposable income, adjusted for inflation, in at least 30 years, you’d be right to take notice.
The bank’s recent inflation report laid bare just how much harder it’s been for people to maintain their standard of living over the last year, with only a slight increase in wages able to keep up with the
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