SCARY CHRISTMAS
Scots hit by massive spending squeeze as inflation tops 5% .. the highest in a decade
SCOTS are facing a massive squeeze on their spending power and living standards this Christmas after inflation leapt to its highest level for more than a decade.
The Bank of England and leading economists were left stunned after the Office for National Statistics (ONS) said the rate of Consumer Price Index (CPI) inflation rose from 4.2 per cent in October to 5.1 per cent in November. The rise in the cost of living is the highest since September 2011 and a bigger leap than experts had predicted.
The data also revealed that the Retail Price Index (RPI) measure of inflation soared to its highest level for more than 30 years – hitting 7.1 per cent last month, up from six per cent in October.
The mounting cost of living crisis affects every household in the country, with prices increasing across a raft of goods and services, including fuel, energy, cars, clothing and food.
Figures showed that petrol prices jumped to the highest ever recorded – 145.8p a litre last month – while the cost of used cars also increased due to shortages of new motors as supply chain issues continue to affect the economy.
The eye-watering jump in inflation is higher than had been expected, with economists having pencilled in a rise to 4.8 per cent in November creeping up to five per cent by next spring.
It is the first time the CPI has breached five per cent for more than a decade and sees inflation remain more than double the Bank of England’s two per cent target.
The data puts further pressure on the Bank ahead of its interest rate meeting on December 16, with policymakers having to weigh up the need to rein in rampant inflation but also to support growth as the threat of Omicron grows.
Unions and anti-poverty campaigners said the jump in prices would hit household living standards without further action from the Treasury.
The TUC said chancellor Rishi Sunak must fund real pay rises for public sector workers and that the minimum wage should increase immediately to £10 an hour.
Labour market figures showed wage increases were below four per cent in October, indicating that despite rising employment and widespread vacancies, workers are likely to see a fall in disposable incomes in the run-up to Christmas.
Jack Leslie, a senior economist at the Resolution Foundation think tank, said: “Next year is likely to be marked by acute economic pain for some parts of the economy alongside a nationwide living standards squeeze.”
Rising living costs, including
Acute economic pain for parts of economy JACK LESLIE SENIOR ECONOMIST
surging energy prices, and worries over being able to afford Christmas contributed to households feeling downbeat, research found.
A survey by comparethemarket. com found that two-fifths (41 per cent) of families say their financial wellbeing is worse than it was during the “pre-pandemic Christmas” of 2019.
Nearly a quarter (24 per cent) of families with children living at home were worried about being able to pay their household bills over the next few weeks.
Ursula Gibbs, director at comparethemarket.com, said: “Rising living and energy costs are a worry for many households across the UK right now, especially for those with dependants at home.
“With uncertainty around inflation rising, many are taking a prudent approach by spending less this Christmas. However, what is concerning is how some families may be relying on additional funding to cover the costs.”
Chancellor Rishi Sunak said the government already had support in place for those who find it hard to pay rising household energy costs. He said: “We know how challenging rising inflation can be for families and households, which is why we’re spending £4.2billion to support living standards and provide targeted measures for the most vulnerable over winter.”
But Labour claimed the Government is not doing enough to tackle rapidly-rising inflation.
Pat McFadden MP, Labour’s Shadow chief secretary to the Treasury said: “These figures are a stark illustration of the cost-ofliving crisis facing families this Christmas. Instead of taking action, the Government are looking the other way, blaming ‘global problems’ while they trap us in a high-tax, low-growth cycle.”