UK Inflation hits 30-year high - Retail Economics

UK inflation hit a 30-year high as of January 2022. It rose by 5.4% YoY in December 2021, from 5.1% in November. This increase is being driven by rises in: food & non-alcoholic beverages (+4.2%), clothing & footwear (+4.2%), and energy (+22.7%).

Inflation has risen sharply compounded by chain disruptions which will further push up sourcing costs. Real earnings growth is in negative territory and is expected to fall throughout 2022. The squeeze on earnings will intensify in April has the energy price cap is lifted and as National Insurance Contributions rise by 1.25%. Collectively, this will hit the least affluent households the most. Without Government intervention, the least affluent households will spend around 12% of their expenditure on energy, up from 8.5% last year.

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