Cost of living rises despite shops closing

THE cost of living rose last month – even though Covid curbs forced non-essential retail stores to shut.

Consumer prices index (CPI) inflation jumped to 0.6 per cent from 0.3 per cent in November – fuelled by rising clothing and transport costs.

Fashionwear prices rose 0.1 per cent month-on-month, in contrast to the usual falls seen due to Boxing Day sales.

And the rush to get away when travel restrictions eased earlier in the month saw ‘transport costs, including air, sea and coach fares’, rise 1.9 per cent, said Jonathan Athow, deputy director general at the Office for National Statistics. That represents an 18-month high. Petrol prices rose 1.5p over the month to 114.1p a litre, and the value of oil also continued to climb, he said.

‘But these were partially offset by falling food prices, most notably for vegetables and meat,’ he added.

Surging demand for computer games, consoles and children’s toys also led to inflation higher than expected. The retail price index, a separate measure of inflation, was 1.2 per cent in December, up from 0.9 per cent a month earlier.

And the CPI, including owner-occupiers’ housing costs – the ONS’s preferred measure of inflation – was 0.8 per cent, up from 0.6 per cent in November.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, predicted inflation would remain low until April, when a potential rise in the energy price cap could push CPI up to 1.5 per cent.

‘Inflation will also rise in the hospitality and recreation sectors in April, when VAT will return to 20 per cent from its current five per cent rate, though most businesses declined to pass on saving to consumers and so will not automatically hike prices,’ he added

The risk of inflation going above the Bank of England’s two per cent target before 2022 ‘seems low’, he said.