Brexit squeeze sends inflation to 4-year high

Hols prices & imports rise

INFLATION has shot to a four-year high of 2.9% after the Brexit vote sent the pound plunging.

Sterling’s slump drove up the cost of imported goods, with foreign holidays more expensive year-on-year.

Computer games were also among items hit by higher prices, causing the peak in inflation last month.

Yet with average wages rising by just 2.1%, it means struggling households have taken a real-terms pay cut.

Lib Dem MP Vince Cable said: “The fall in the pound and market uncertainty since the Brexit vote are already squeezing people’s incomes across the country.

“This will only get worse unless Theresa May aban- dons her plans for an extreme, UKIP-style Brexit, outside the single market and customs union.”

The rate has leapt tenfold since last May, when living costs edged up by just 0.3%.

Yet the Bank of England had forecast the Consumer Prices Index measure of inflation would not reach these levels until the end of 2017. Experts predict living costs will peak at 3.2%.

A fresh dip in the pound since last week’s general election is expected to push import costs even higher.

The Retail Prices Index, another inflation measure including housing costs, rose from 3.5% to 3.7% last month. TUC General Secretary Frances O’Grady said rising prices would further hit wages, adding: “Working people are still £20 a week off worse, on average, than they were before the crash.”

A Treasury spokesman said: “The Government is helping families by keeping taxes low, freezing fuel duty and increasing the National Living Wage.”