Chancellor urged to weather storm as inflation hits 30-year high

The Chancellor must use next month 's Spring Statement to help weather the cost of living storm after UK inflation hit a 30-year high, business leaders said today.

New figures from the Office for National Statistics (ONS) reveal UK inflation reached 5.5 per cent in January - the highest reading since March 1992.

The largest upward contributions to inflation were energy and transport costs .

Clothing and footwear, housing and household services, and furniture and household goods prices also pushed up inflation.

The new statistics follow yesterday 's announcement that wages are failing to keep up with inflation, as average basic pay rose by 3.7 per cent per year in the three months to December 2021.

Erin Henwood (pictured), policy advisor at Greater Birmingham Chambers of Commerce, said: “With living standards falling at their fastest pace since 2014 and pay growth now dropping behind inflation, businesses and individuals alike are facing a troubling cost-of-living crisis.

“Rising prices of supplies, wages, energy bills, and taxes pose a major risk to England 's post-pandemic recovery as many businesses continue to battle a challenging economic environment.

“Given that inflation was highlighted as a key concern by local firms in our Q4 2021 Quarterly Business Report, there will be little surprise following today 's inflation figures if this quarter 's survey reveals similar results.

“Despite the worst squeeze on disposable household incomes for at least 30 years, the Government has so far been relatively quiet on how it plans to help the country weather this storm.

“Other than the recently announced loan for energy bills, there have been no announcements regarding possible plans to scrap the incoming National Insurance Levy or to extend the VAT reduction for hospitality businesses, and nothing to help businesses with spiralling overheads.

“Four members of the Bank of England 's Monetary Policy Committee voted earlier this month for a higher increase in interest rates than 0.5 per cent, making it somewhat inevitable that a further hike is on the horizon.

“Any action on monetary policy must be followed by policy intervention, and thus all eyes will be on the Chancellor during his Spring Statement at the end of next month. ”