Inflation has hit another 30-year high with consumer prices surging 5.5% in the 12 months to January, up 5.4% in December, according to the Office for National Statistics (ONS).
Inflation is now outpacing wage growth as energy, fuel and food costs continue to rise, squeezing household budgets.
The ONS said electricity bills were up 19% in the year to January and gas bills up by 28%.
The British Chambers of Commerce (BCC) has called for more support for businesses and again said April’s planned National Insurance rise should be shelved.
BCC Head of Economics, Suren Thiru, said: “Rising inflation highlights both the cost-of-living crisis facing households and the uphill struggle for businesses to keep a lid on price rises amid surging cost pressures.
“While the headline annual figure remains at a 30-year high, the decline in monthly inflation in January offers some hope that we may be nearing the peak in the current spike in inflation.
“Inflation should peak at over 7% in April as reversal of the hospitality VAT cut and the energy price cap rise enters the calculation. However, the current Russia-Ukraine tension could keep inflation higher for longer by triggering a further surge in wholesale energy costs.
“Rising inflation could well be a significant drag anchor on UK economic output this year by weakening consumer spending power and damaging firms’ finances and ability to invest.
“Increasing inflation means that a March interest rate rise is expected. However, tightening monetary policy too quickly risks undermining confidence and the wider recovery and will do little to curb the global factors behind the current inflationary surge.
“More needs to be done to limit the unprecedented rise in costs facing businesses, including financial support for those struggling with soaring energy bills and delaying April’s National Insurance rise.”