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Inflation hits new 30-year high in February

The cost of living continued to soar last month, according to official figures. 

Prices rose by 6.2% in the 12 months to February – the fastest for 30 years – as fuel, energy and food costs surged.

Prices are rising faster than wages and the Bank of England thinks it could hit double digits this year.

Chancellor Rishi Sunak and Prime Minister Boris Johnson have been under pressure to do more to help struggling households.

Inflation is the rate at which prices rise. If a bottle of milk costs £1 and that rises by 5p, then milk inflation is 5%.

Since December last year, prices have been rising at their fastest rate since the 1990s.

Inflation is expected to speed up in April when the energy price cap is increased.

This will push up the average household fuel bill up by £693 a year in England, Scotland and Wales, while a planned rise in National Insurance will also put pressure on household budgets.

“Rising inflation remains a significant concern for the economy, squeezing household incomes and increasing cost pressures on retailers,” said Helen Dickinson, chief executive of the British Retail Consortium.

Paul Dales, chief UK economist at Capital Economics, said the pick up in inflation “adds to the pressure on the chancellor to offset more of the cost of living crisis”.

In his Spring Statement, Mr Sunak said that the war in Ukraine had a “significant impact” on the cost of living in the UK.

In the statement he cut fuel duty by 5p per litre, raised the threshold for National Insurance to £12,570, and announced a cut to the basic rate of income tax to 19% from 20% in 2024.

But Labour’s shadow chancellor Rachel Reeves said Mr Sunak’s choices “were making the cost of living crisis worse, not better”.

She said he should have put a windfall tax on oil and gas companies and scrapped the national insurance hike.

The Office for National Statistics (ONS) said gas prices were almost a third higher in February than a year earlier, and electricity prices were up by nearly a fifth. 

Average diesel prices hit their highest on record during the month, while food prices rose nearly 1% – the largest monthly increase since 2012.

ONS chief economist Grant Fitzner said prices of other goods such as toys, clothing and furniture also climbed. 

“The price of goods leaving UK factories has also been rising substantially and is now at its highest rate for 14 years,” he added.

What these figures lay bare is that the cost of living crunch is unavoidable.

Consumers have already been facing the financial reality of more expensive food, fuel and energy – all of which are necessities for pretty much every household.

Now the ONS has confirmed that price rises are more widespread.

Buying your child a toy for their birthday is more expensive than it was a year ago. 

Getting a new sofa takes a bigger chunk of your disposable income.

The worry is that there is more of this to come, not least that analysts are predicting that a typical household energy bill will rise by £500 a year in October, on top of the annual £693 increase which takes effect at the start of April.