Inflation hits 6.2% - what does this mean for you?
Inflation soars to a 30-year high, adding further pressure to the cost of living


The financial squeeze on household budgets will get tighter as inflation accelerates to a new 30-year high. Many households are already feeling the pinch with an increase in fuel prices and energy costs.
Figures from the Office for National Statistics, (23 March) show the latest jump in the Consumer Prices Index, (CPI), measure of inflation, rose from 5.5% in January to 6.2% over the year to February.
“Inflation rose steeply in February as prices increased for a wide range of goods and services, for products as diverse as food to toys and games”, says Grant Fitzner, Chief Economist at the ONS.
This means inflation is now at its highest level since March 1992, when it reached 7.1%.
How will inflation affect my finances?
Inflation has several effects on your finances.
Firstly, the cost of everyday essnetials will go up. The cost of groceries is now 5.2% higher than it was a year ago, with inflation in the past four weeks hitting its highest level in nearly a decade, according to new data.
Prices are rising fastest in markets such as savoury snacks, dog food and cat food, with jumps not seen since April 2012.
Secondly, inflation eats away at the value of your savings. When inflation is higher than the interest you're earning on your savings, you are effectively losing money every year. And there is currently no savings account that pays a rate of interest anywhere near the current rate of inflation.
Pensioners will particularly feel the effect of inflation. The suspension of the triple lock means that the state pension's increase of 3.1% in April will be substantially lower than 6.2%.
What’s fuelling the high inflation figures?
Higher prices across the board on food, clothing, furniture and household equipment have all contributed to the high inflation figures.
Some of the biggest rises in recent months have been on fuel, with the ONS saying average petrol prices hit a record of 147.6p a litre in February, compared with 120.2p a year earlier. Average diesel prices were also the highest on record last month at 151.7p a litre.
“The headline figure for inflation can be far removed from the real surge in prices for individual items and measuring the ‘real’ cost of living is fiendishly tough”, says Annabelle Williams, personal finance specialist with digital wealth manager Nutmeg.
“In the past ten years the ONS has come up with ‘better’ calculations and now has three different inflation measures which all come in at wildly different levels. Whichever measure you look at, prices are increasing at levels not seen for a generation and people are looking for help with their everyday living costs and tips for making their money go further”.
The Bank of England has warned inflation could even hit double digits if wholesale energy prices continue to soar as a result of the war in Ukraine, as it raised interest rates this month, for the third time since December, up from 0.5% to 0.75%.
Inflation is rising across the world
According to the Office for National Statistics, the current high levels of inflation are not just being felt across the UK.
“The UK is not alone in experiencing high inflation in recent months. UK inflation has been broadly in line with the EU average for the last year, while US inflation has risen considerably more quickly, reaching 8.1% in December 2021”.
While it may not make for fun reading, you can see how inflation is affecting your household budget with this free inflation calculator from the Office for National Statistics.
Additional reporting by the PA
Sue Hayward is a personal finance and consumer journalist, broadcaster and author who regularly chats on TV and Radio on ways to get more power for your pound. Sue’s written for a wide range of publications including the Guardian, i Paper, Good Housekeeping, Lovemoney and My Weekly. Cats, cheese and travel are Sue’s passions away from her desk!
-
-
Council tax rebate explained: when can you expect to get the £150 refund?
Everything you need to know about the £150 council tax rebate
By Katie Binns • Published
-
Two in three UK crypto owners borrowed money to invest
Consumers who borrowed money to buy crypto coins are left with devastating losses and debt after the coins crash
By Tom Higgins • Published
-
Council tax rebate explained: when can you expect to get the £150 refund?
Everything you need to know about the £150 council tax rebate
By Katie Binns • Published
-
Gas and electricity suppliers: how to choose the right energy firm
Switching to a new energy supplier can mean lower bills, better customer service or simply a more environmentally friendly deal
By Sue Hayward • Published
-
Will energy prices go down in 2023? Latest predictions for October 2022 and beyond
As households grapple with a 54% rise to their electricity and gas bills, we look at whether energy prices will rise again in October and if they could fall in 2023
By Ruth Emery • Published
-
More action on energy bills needed by July, says ScottishPower boss
ScottishPower boss calls for a ‘targeted’ support plan for the most vulnerable by July, before further energy price increases in October
By Katie Binns • Published
-
Broadband speed: how fast does your broadband need to be?
Avoid the dreaded buffering by ensuring your broadband speed is fast enough to meet your needs
By Tom Higgins • Published
-
How to save money on your broadband bills
Broadband bills are rising – but there are ways to pay less for your internet connection. We show you how to keep your broadband costs low
By Emma Lunn • Published
-
Energy bill increases: regulator to crack down on unfair energy direct debits
As energy bills rise, some customers have noticed their direct debits payments have increased by more than expected. Here are your rights if you are affected
By Ruth Emery • Published
-
Single person council tax discounts: how do they work and am I eligible?
If you live alone, you could be eligible for a discount on how much council tax you pay. Find out more with this handy guide
By Sue Hayward • Published