Families are paying price

Inflation data reveals cost of living woes

A SHOCK rise in the cost of living is bad news for savers and families.

Inflation, measured by the Consumer Price Index, hit 3.1% in November, its highest level in almost six years. The rise leaves savers’ nest eggs worse off with returns almost everywhere well below the rate of inflation.

Air fares falling more slowly than before and more expensive computer games helped push up the index, as did the rising prices of other toys and hobbies. At the pumps, motorists also faced higher fuel costs in November, with petrol up 1.8p a litre month on month to 119.1p. Diesel also climbed by 2.3p a litre to 122.8p.

But different figures suggest the cost of groceries is climbing even more quickly. Food inflation hit 3.6% in the three months to December 3, the highest level since 2013, according to research firm Kantar Worldpanel. Fish, pork and butter prices are rising fastest. “The figures are about as welcome as a burst water pipe,” said Kate Smith of Aegon.

“Household finances have been under far more pressure from the rising cost of living than in any recent years.”

Mel Stride, Financial Secretary to the Treasury, said: “Inflation is expected to fall over the coming year, but I recognise families are feeling a squeeze now.” The Bank of England will announce its next decision on interest rates tomorrow. It increased the cost of borrowing to 0.5% last month but is not likely to announce another rise, despite the higher-than-expected inflation figure.

Meanwhile Kantar said Aldi regained its crown as Britain’s fastest-growing grocer during the latest quarter with sales up 15.1%, marginally ahead of Lidl which grew sales by 14.5%.

Bank of England Governor Mark Carney will now have to write a letter to Chancellor Philip Hammond explaining how the Bank intends to bring inflation back to its 2% target.

Mr Carney has to write to the Chancellor if inflation climbs above 3% or falls below 1%. The letter will be published in February.