Cost surges in petrol and diesel – as well as rising food prices – pushed up the cost of living in January, resulting in a 0.2% leap in the Consumer Price Index (CPI) measure of inflation.
The Office for National Statistics (ONS) reported this week that CPI shot to 1.8% in January from 1.6% in December. Not since June 2014 had this level been that high.
While the rise in cost of living – mainly prices at the pump – is a big worry, the CPI reading actually failed to match earlier predictions from worried economists in the UK (1.9%) or indeed the Bank of England itself (2%).
Compared to a 2.6% drop a year earlier, fuel prices climbed 3.4% over the period, with the rising price of Brent crude being passed on at the pumps.
Recent figures suggest that a staggering 65% of the current price of tank of fuel is swallowed up by tax.
Also released were separate figures for the Producer Price Index (PPI), which show the amount paid for fuel and materials by manufacturers – known as input prices. It showed that last month PPI notched its fastest rate of growth in almost nine years, rising by 20.5%.
Import prices too crept up by by 20.2%, as rising oil prices and the £’s slump against the euro and dollar took their toll.
According to the ONS, the main drivers of CPI escalation were transport prices – which fell by 0.6% between December and January, compared with a 2.5% drop the year before – rising petrol and diesel prices, and a significant slowdown in the fall in food prices.
A Treasury spokesperson said it had frozen fuel duty and cut taxes to help families concerned about the cost of living.
“As a net importer of fuel the UK is at the mercy of the international exchange rate.
“Since the June 2016 referendum we have seen approximately eight pence per litre added to fuel prices of which we estimate over four pence can be attributed to the impact of the collapse in the pound against the dollar.
“This combined with a steady increase in the price of oil is a double whammy for drivers pushing up UK pump prices.
“Motorists will fear any further statements which undermine confidence in the pound as this will have an immediate and decisive upward impact on fuel prices which represents a significant proportion of their household budgets.”
With rising costs to company car insurance, road tax and further fuel rises, 2017 is shaping up currently to be an expensive year for the UKs motorists