UK inflation reached 3% in January, marking its fastest growth in 10 months, notably fueled by rising food prices, higher air fares, and new VAT on private school fees. Essential groceries like meat and dairy have seen significant price hikes, reflecting broader inflationary pressures. Households are preparing for additional cost increases, particularly with energy and tax bills expected to rise. Speculation about the Bank of England's interest rate strategy intensifies amid concerns that rising inflation may not be temporary, necessitating a re-evaluation of monetary policy moving forward.
"Life is a struggle," one young mother, Gaby Cowley, noted that her weekly shop has nearly doubled over the past three years.
The ONS says the inclusion of VAT on private school fees triggered about a 13% increase in fees at the start of the year.
It's unclear whether the latest spike is a "harbinger of more to come" or simply an outlier that can be discounted when setting monetary policy.
Higher wage bills and a forthcoming increase in National Insurance could further stoke inflationary pressures as employers might pass costs to consumers.
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