New figures published by the Office for National Statistics, reveal the cost of living rose by 5.1% in the 12 months to November, its highest rate in 10 years. The jump was driven largely by rising fuel and energy costs.
Head of Economics at the British Chambers of Commerce, Suren Thiru, said: “The latest figures confirms that the surge in inflation continued unabated in November.
“The increase largely reflected higher fuel prices and strong base effects which pushed up clothing and footwear prices in comparison with November 2020. Stronger growth in producer prices points to an acceleration of cost pressures in supply chains, indicating that inflation will drift higher over the coming months.
“It is concerning that inflation is outpacing wages and if this disparity continues to increase as we predict, real household incomes will be squeezed further, dampening consumer spending, and weakening overall economic activity.
“Inflationary pressures are expected to intensify in the near term as the rising cost of imported raw materials, higher energy prices and the reversal of the VAT reduction for hospitality and tourism drives inflation materially higher by the middle of 2022.
“Omicron could accelerate the current surge in inflation if restrictions in the UK and overseas to combat the new variant triggers more supply chain disruption.
“Despite surging inflation, a December interest rate rise remains improbable given concerns over Omicron. While rates will rise sooner rather than later, with the current inflationary spike mostly driven by global supply constraints and price pressures, higher rates will do little to curb further price rises.
“Greater support is immediately needed for those businesses impacted by Plan B, including making additional grant funding available and reverting the VAT for hospitality and tourism back to its emergency rate of 5%.”