Inflation hits its highest level in 30 years as costs rise 7% in March

Chancellor Rishi Sunak is facing more economic pressure today after the rate of inflation soared to a 30-year high.  

The rate of Consumer Prices Index inflation increased to 7 per cent in March from 6.2 per cent in February, the Office for National Statistics has said.

The rise was higher than the 6.7 per cent that analysts had expected and was driven by fuel, restaurant and food prices. 

It comes after the UK also recorded uninspiring employment figures and slower GDP growth this week.

It was once more the highest point since March 1992, when inflation stood at 7.1 per cent. 

Labour’s Pat McFadden, the shadow chief secretary to the Treasury, said: ‘The cost of living is hitting households hard. Not only are energy prices up, the Government is imposing tax rises. And as today’s rising inflation figures show, prices on everyday items are up too. 

The rate of Consumer Prices Index inflation increased to 7 per cent in March from 6.2 per cent in February, the Office for National Statistics has said.

It comes after the UK also recorded uninspiring employment figures and slower GDP growth this week.

The Office for National Statistics said yesterday that basic pay was now ‘falling noticeably in real terms’ as the cost of living rises sharply.

And on Monday, official figures showed GDP increased by just 0.1 per cent as the cost of living crisis began to bite, compared to the robust 0.8 per cent seen in January

‘Labour has a plan to cut energy bills through a one-off windfall tax on oil and gas producer profits. Meanwhile, the Chancellor has increased taxes for working people to their highest levels in 70 years. 

The increase does not even take into account the average 54 per cent increase in energy bills that was applied to around 22 million households two weeks ago.

This will not appear in inflation figures until next month, when April’s data is expected to show another jump in inflation and demonstrate the increased squeeze on ordinary people.

The Bank of England has predicted that inflation could peak at around 8 per cent in April.

ONS chief economist Grant Fitzner said: ‘Broad-based price rises saw annual inflation increase sharply again in March.

‘Amongst the largest increases were petrol costs, with prices mostly collected before the recent cut in fuel duty, and furniture.

‘Restaurants and hotel prices also rose steeply in March while, after falling a year ago, there were rises across a number of different types of food.

‘The price of goods leaving UK factories has continued to rise substantially with metal and transport products both at record highs and food reaching its highest rate for over a decade. Raw material costs also rose, with a notable increase in the price of crude oil.’

Britons face biggest drop in real pay for NINE YEARS amid cost of living crisis – as Galvin Restaurants boss reveals he is forced to give 20% salary boosts to cling onto his staff

Britain’s workers have suffered the biggest drop in their take-home pay for nearly nine years as the cost-of-living squeeze tightened, official figures revealed yesterday.

The Office for National Statistics (ONS) reported that basic pay dropped to minus 1 per cent and was now ‘falling noticeably in real terms’ amid rampant inflation.

And the ONS added that regular pay excluding bonuses tumbled 1.8 per cent in the three months to February when taking soaring inflation into account as measured by the Consumer Prices Index (CPI) – the steepest fall since August to October 2013.

It comes as Chris Galvin, co-founder of Galvin Restaurants, a collection of fine dining outlets, said he was having to increase wages by up to 20 per cent to retain staff.

He told BBC Radio 4’s Today programme: ‘Wage rises have gone through the roof, and we’re looking at somewhere between 10 and even 20 per cent at the moment.

Asked if this was because staff were threatening to quit if they didn’t get such a big rise, Mr Galvin said: ‘Yeah, it is, and to attract good talent. People that we’re demanding perhaps £30,000 before are now looking for £40-48,000. And we’re having to look at paying the going rate, and it’s a difficult market.

‘There’s far more vacancies than we’ve ever had. Hospitality has always been short of staff, traditionally we bring in people from Europe, from abroad, but we’ve never had so many vacancies ever. I think we’re probably 20 per cent down on our workforce.’

He added: ‘We’re seeing poaching on quite an intense basis now. People coming in, offering jobs – posing as customers, but they’ll tap up our waiters, tap up managers, and there’s rumours of finding smoking areas of staff and infiltrating the team there.

‘The worst thing is if they attract one, they’ll encourage colleagues. So the first time ever we’re looking at introducing gardening leave into hospitality, which is madness. But to lose one is tough when you’ve spent a lot of time training and developing someone – but they’re also encouraging others to go.’

He spoke as Chancellor Rishi Sunak faced more economic pressure today as new jobs figures showed the impact of soaring inflation on British workers. 

In February alone, real regular wages dropped 2.1 per cent which was the biggest drop since August 2013, the ONS said.

While pay rose 4 per cent in the quarter, it was far outstripped by inflation and experts have warned wages will lag even further behind rising prices this year as inflation is expected to rocket in the autumn.

The latest ONS labour market data also revealed another rise in the number of UK workers on payrolls, up by 35,000 between February and March to 29.6 million.

But this was the smallest monthly increase since February last year while vacancies also saw the smallest rise since February to April 2021, up 50,200 at a record 1.29 million in January to March.

Chris Galvin, co-founder of Galvin Restaurants, a collection of fine dining outlets, said he was having to increase wages by up to 20 per cent to retain staff

Darren Morgan, director of economic statistics at the Office for National Statistics (ONS), said: ‘While strong bonuses continue to mitigate the effects of rising prices on people’s total earnings, basic pay is now falling noticeably in real terms.’

There were 86,000 fewer jobless Britons at 1.3 million in the quarter to February, while those in employment rose 10,000 to 32.5 million.

More timely pay as you earn (PAYE) data showed there was another rise in the number of UK workers on payrolls last month, up by 35,000 between February and March to 29.6 million.

But there were signs of easing demand for staff, with this marking the smallest monthly increase since February last year.

Vacancies also saw the smallest rise since February to April 2021, up 50,200, but hit another record high of 1.29 million in January to March.

And a shrinking labour market, due mostly to older workers choosing to retire early throughout the pandemic, has also seen those classed as economically inactive rise by 76,000 in the quarter to 8.9 million.

The figures come amid forecasts that inflation will peak at nearly 9 per cent this autumn, with official data on Wednesday set to show another steep rise in the CPI.

The latest data from the ONS marks the calm before the storm, ahead of April’s energy cap rise, council tax bills increase and the national insurance contribution rise.

The UK’s economic forecasters, the Office for Budget Responsibility (OBR), recently warned that households will suffer the biggest fall in real incomes since records began in 1956, with a drop of more than 2.2 per cent this year.

Mr Sunak said: ‘Today’s stats show the continued strength of our jobs market, with the number of employees on payrolls rising once again in March and unemployment falling further below pre-pandemic levels.’ 

But shadow chief secretary to the Treasury Pat McFadden replied: ‘Today’s figures show that Conservative choices are leaving real wages squeezed and people worse off.

‘At a time like this, Rishi Sunak could have chosen a one-off windfall tax on huge oil and gas company profits to cut household energy bills by up to £600.

‘Instead, he’s decided to make Britain the only major economy to land working people with higher taxes in the midst of a cost of living crisis.’

It comes after figures yesterday suggested the Uk is heading for stagflation – when costs rise but the economy does not grow in lockstep.

Official figures showed GDP increased by just 0.1 per cent in February as the cost of living crisis began to bite, worse than the 0.3 per cent anticipated and far below the robust 0.8 per cent seen in January. 

The gloomy data came even before the Russian invasion of Ukraine threw the global situation into chaos and sent oil and gas prices spiralling higher.

Experts warned it is likely to be the start of a ‘prolonged period of considerably weaker growth’ – while inflation is predicted to keep rising, possibly into double digits. 

Chancellor Rishi Sunak – who is struggling to contain a furore over his family’s tax affairs – welcomed the fact the economy stayed in positive territory.

But he cautioned that while the ‘robust’ response to Vladimir Putin’s aggression was right it would create ‘additional economic uncertainty’.