The annual rate of inflation shot up to a fresh 30-year high of 7% in March reflecting, for the first time, the immediate effects of Russia’s invasion of Ukraine.
The largest contributors to growing inflation were increased fuel prices and energy bills, according to the Office for National Statistics (ONS).
The consumer prices index (CPI) rose from 6.2% in February and was higher than expected, with economists having predicted a rate of 6.7%.
Inflation remains at its highest point since March 1992, when it stood at 7.1%.
The ONS noted that fuel prices were collected before the fuel duty cut of 5p a litre – but recent reports show that it seems to have done little to cool prices at the pump.
Rising inflation will further stoke fears, in the wake of the meagre 0.1% economic growth achieved in February, that the economy risks a period of so-called stagflation.
That is because the Consumer Prices Index (CPI) rate is tipped by experts to exceed 8.5% for the current month of April when households were hit with an unprecedented rise in energy bills.
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Fuel poverty looms for families
The 54% increase in the energy price cap was set before Russia’s invasion of Ukraine in late February but a leap in other costs linked to the war were included in the March inflation data.
Fuel costs were hitting record levels almost daily as oil prices surged to levels not seen for 14 years while a host of other commodities, such as wheat, contributed to the price pressures.
While the Bank of England has signalled that further interest rate rises to curb expectations of higher inflation are less likely in the coming months because of the risk they choke off economic growth – there is further pressure on the chancellor.
Rishi Sunak, under fire this month over his family’s tax affairs and latterly the partygate scandal, had already faced a backlash over the Treasury’s response to the deepening cost of living crisis.
There was particular anger among his critics that the spring statement last month included no new cash for those on benefits given that the Office of Budget Responsibility was predicting the biggest slump in living standards since the 1950s.