PRICES PANIC
Alert over cost of living as petrol & clothing rises lift inflation rate
MILLIONS of struggling workers face another fall in living standards after inflation hit a two-year high, taking prices up faster than wages.
The consumer price index, the measure of annual living cost changes, leapt to 1.2% in November – up sharply from 0.9% in October.
The increase, worse than predicted, was driven by the biggest monthly jump in clothing prices for six years and dearer petrol and diesel.
It comes as wage growth is slowing – with signs of even higher prices to come.
Manufacturing costs rocketed nearly 13% last month, as the weaker pound since the Brexit vote pushed up the price imported materials. Oil prices are also at a two-year high. Economists predict inflation will rise to 2% next spring and will go up further to 3% later in 2017. A year ago it stood at just 0.1%. TUC general secretary Frances O’Grady warned that workers had suffered a decade of lost wage growth. She said: “The government needs to act fast to avoid another living standards crisis. That means a clear plan for Brexit.”
Food and drink are still cheaper yearof on-year, but rose 0.4% in November, driven by bread, cereals and dairy.
But clothing prices jumped 1.6%, and IT equipment went up because of a weak pound against the dollar. There were also sizeable increases in furniture, especially leather settees, and petrol rose 1.6p a litre while diesel went up 2p.
Economist Matt Whittaker said: “Earnings are set to be flat over the coming 12 months, and workers might even suffer a fresh pay squeeze.
“This is likely to represent a significant living standards blow to millions.”