The burden of fast-rising inflation returns

The latest figures on annual inflation from the Office of National Statistics have revealed that the CPI – the Government’s target measure of inflation – was 2.9% in December, up from 1.9% in November.

Commenting on the figures, Andrew Harrop, Head of Policy at Age Concern and Help the Aged, said:

“Many older people on low incomes will dread a bounce back of inflation, as they are already bracing for a round of post-freeze energy bills.”

“With the leap in inflation outstripping Government’s predictions, many older people relying on their state pension income will be worrying about whether their incomes will stretch to meet essential costs over the coming months.”

“While the basic state pension is due to increase by 2.5 per cent, other elements of the state pension including the additional pension are due to be frozen at current levels. We urge the Government to reconsider this decision.”

Meanwhile, Liberal Democrat Shadow Chancellor, Vince Cable suggested that the latest figures were not necessarily a sign of things to come:

“These figures are almost certainly a temporary spike. With inflation expected to fall quickly, it seems unlikely that the Bank of England would want to raise interest rates in the near future.”

“Any recovery in the economy is still very fragile, it would be all too easy to destroy it by putting the brakes on too soon. However, the MPC still needs to be acutely aware of the longer term inflationary dangers. With the world economy improving at a much quicker rate than the UK, there is a danger that high food and energy prices could hit our economy before it has had chance to recover.”