Inflation hits new 30-year high as chancellor expected to ease cost of living crisis

The annual rate of inflation has hit 6.2% as the chancellor prepares to outline how he will help households with soaring living costs in his Spring Statement 2022.

The consumer prices index (CPI) increased in February from 5.5% in January and remains at the highest level in 30 years, according to the Office for National Statistics (ONS).

Economists polled by Reuters had predicted the figure to be lower, at 5.9%.

Watch and follow the chancellor’s spring statement on Wednesday from 12.30pm on Sky News.

The ONS data did not reflect the impact of the war in Ukraine because its survey concluded before Russian president Vladimir Putin ordered his troops to invade.

Inflation is set to continue climbing, with the Bank of England warning that it could reach 8% next month, driven by the 54% rise in the energy cap that is set to come into force on 1 April and will affect 22 million households.

The cap is set to soar by almost £700 on average in response to surging wholesale prices, which have since been pushed even higher due to the invasion and sanctions imposed on Russia in retaliation for its move.

It could mean energy bills going up by a further 35% when the cap is reset in October, according to the bank’s monetary policy committee, while spikes in other essential commodities, such as wheat and metals, will also add to the squeeze on household finances.

The chancellor’s 2022 Spring Statement, often described as a “mini budget”, will provide an opportunity for him to address the challenges facing families and businesses.

Reports suggest he could cut fuel duty by 5p per litre and raise the income level at which national insurance becomes due.