Inflation is at its highest rate for 30 years, having risen to 5.4% in the 12 months to December. The jump in the cost of living, driven largely by rising fuel and energy costs, puts further pressure on households across the UK. Inflation is the rate at which prices are rising. If the price of a bottle of milk is £1 and it rises by 5p, then milk inflation is 5%. You may not notice price rises from month to month. But right now, prices are rising so quickly that average pay is not keeping up. It means that the money people earn does not go as far. The main reason is the rising global price of energy. This has meant higher energy and transport bills for businesses, many of whom pass on the extra costs to customers. Supply problems and higher shipping costs also continue to hurt businesses. Next, the High Street retailer, has admitted its prices could rise by up to 6% this year to keep up with higher costs. Staff shortages are a particular problem in the UK, due to Brexit and the pandemic, and are prompting some employers to raise wages.
