Rising food, transport and clothing costs have helped inflation rise to 3.1% – the highest level for six years.
Public sector union UNISON has called for a pay rise for public sector workers that at least matches inflation, which has risen to 3.1% according to new figures released today.
UNISON general secretary Dave Prentis said in a statement:
With inflation at its highest level in six years, many public service workers are facing a bleak Christmas.
With wages now lagging even further behind the cost of living, the government’s punishing pay cap is pushing families to the brink. It’s time that all public service workers received a decent pay rise that at least matches the rate of inflation.
The statement came in response to new figures from the Office for National Statistics (ONS) which show that the Consumer Price Index (CPI) rose to 3.1% in November 2017 – up from 3% in October. The government have set a target to keep this to within one percentage point of 2%, so now it has exceeded this level Mark Carney, governor of the Bank of England, is required to write a letter to the chancellor Philip Hammond explaining why they have been unable to stay within the target.
Breaking down the ONS data shows that food prices have increased by 4.1% over the past year, while transport costs are up 4.5% and clothing/footwear up by 3% – all of which are putting a strain on household finances.
The fall in the value of the pound since last years EU referendum has been a key factor in the increase in inflation, which stood at just 1.2% in November 2016.
Many analysts believe inflation is currently close to its peak level, but there may be evidence of more inflationary pressure on the economy due to rising producer prices – the cost of fuel and raw materials used by industry and the price of goods leaving the factories.
In November, the bill for fuel and raw materials for manufacturers were 7.3% higher than they were a year ago – and up from 4.8% in October. Factory gate prices therefore rose by 3% in November, with more increases expected.
The ONS head of inflation, Mike Prestwood, said of the latest figures:
CPI inflation edged above 3% for the first time in nearly six years, with the price of computer games rising and airfares falling more slowly than this time last year. These upward pressures were partly offset by falling costs of computer equipment.
The prices of raw materials and goods leaving factories continued to increase as oil and petrol prices continued to rise. Annual rises in house prices and rents continued to slow, with London seeing house price falls for the second month running.
All of which suggests the calls from UNISON to secure pay rises in line with inflation are likely to get louder in the coming months as household finances continue to be squeezed.