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Higher clothing and footwear prices have pushed living costs up again, with inflation remaining at 30-year high last month.

Consumer prices surged by 5.5% in the 12 months to January, up from 5.4% in December, the Office for National Statistics (ONS) said.

Inflation is now outpacing wage growth as energy, fuel and food costs continue to rise, squeezing household budgets.

Inflation is expected to climb above 7% this year, the Bank of England says.

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

Since pandemic restrictions were eased last year, companies have faced higher wage, shipping and energy costs which they have passed on to customers.

Housing costs have also been rising, while the ONS said retailers offered fewer sales and discounts in the New Year, compared to the steeper discounts seen last January.

“Clothing and footwear pushed inflation up this month and although there were still the traditional price drops, it was the smallest January fall since 1990, with fewer sales than last year,” ONS chief economist Grant Fitzner said.

The cost of household staples also increased in the year to January, with pasta prices rising 15% and margarine soaring 37%, putting a squeeze on household budgets.

Inflation is set to get worse when the energy price cap is lifted in April, pushing up the average household fuel bill up by £693 a year in England, Scotland and Wales.

An increase in the National Insurance rate to help fund the NHS will also hit people’s pockets.

Chancellor Rishi Sunak said the government was taking action to support families.

“We recently stepped in to provide millions of households with up to £350 to help with rising energy bills,” he said.

“We’re also helping people on the lowest incomes keep more of what they earn by cutting the Universal Credit taper rate, and freezing alcohol and fuel duties to keep costs down.”

But Pat McFadden, Labour’s shadow chief secretary to the Treasury, said the government needed to do more.

“The chancellor’s buy-now, pay-later scheme on energy bills loads up debt for future years, while his tax rises will only make matters worse,” he said.

Source*

 

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