Inflation hit costs British households £24bn in 2017
The rising tide of inflation has cost British households an extra £24bn in 2017, with commuters suffering the most, new analysis to be published today will reveal.
The increase in inflation seen from 2016 to 2017 cost Britons more than £900 per household, according to Simon-Kucher and Partners, a consultancy.
The rise in transport prices accounted for the largest chunk of that bill, with an extra £255 spent by the average household compared to a continuation of the low inflation seen in 2016.
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Train fares rose by 2.3 per cent in 2017, following the retail price index measure of inflation, with another 3.4 per cent hike this year. Meanwhile, petrol prices also rose to the highest level in three years.
Prices have surged over the past year as the impact of the massive devaluation of sterling following the Brexit vote in June 2016 has gradually fed through.
Inflation reached 3.1 per cent in the year to November 2017, according to the Office for National Statistics, with the latest data to be published tomorrow.
The price rises have outstripped wage increases, and have jumped well above the Bank of England’s two per cent target. The Bank’s governor, Mark Carney, will write an open letter explaining the above-target inflation to the chancellor.
Read more: UK inflation hits 3.1 per cent
Dr Peter Colman, partner at Simon-Kucher, said: “This is by far the biggest inflationary hit consumers have faced for several years. Commuters in particular have felt the impact, whether they drive or use public transport.”
Housing costs also rose, accounting for an extra £180 per household, while food prices contributed to a £160 increase for the average household.
Colman, said: “Looking ahead, businesses are facing a raft of cost increases in 2018. There are pressures everywhere from business rates, to living wage costs, to pensions and raw materials.
“If companies are going to protect their margins, it’s inevitable that they will need to pass on these cost increases to consumers.”
Price rises could come via price hikes or so-called shrinkflation, the reduction of product sizes, he added.
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