It rose by 5.4 percent, up from 5.1 percent in November 2021. This is the highest CPI 12-month inflation rate in the National Statistic data series which began in January 1997.
In fact, it was last higher in the historical modelled data series in March 1992, when it stood at 7.1 percent.
Those saving for retirement have been most affected by the increase.
More specifically, anyone with final-salary pension or who has bought an annuity for retirement will be hit especially hard.
This is because retirees are more likely to spend time at home than the employed.
This can naturally increase their energy bills.
Energy bills are increasing by more than the record CPI rises so inflation for retirees is likely to be much higher.
Les Cameron, retirement expert at M&G Wealth expressed:
“Anyone funding their retirement or supplementing their retirement income with significant cash or cash-like savings, such as some National Savings & Investment products, should take action”.
“Savings rates are substantially lower than inflation, so people need to decide whether to accept inflation eroding their standard of living, or to take some level of investment risk to try and get a better return and protect some of their wealth from being eroded.”
The retail prices index (RPI), which tends to be higher, has also increased to 7.5 percent since December 2021.
Furniture, household goods and clothing contributed to the rise.
Inflation is the rate at which prices are rising over a given time.
High inflation means that people can’t buy as much with the money that they have.
If wages don’t rise in line with inflation, then living standards fall.
Too much inflation, as we are seeing at the moment, can delay spending.
It is essentially a measure of the cost of living: the rate at which the price of goods (such as food) and services (such as train tickets) increase over time.
Every month, the Office for National Statistics (ONS) looks at around 180,000 prices of around 700 items.
The average price of these goods and services in the basket is compared with last year’s figures.
The CPI measure of inflation can then be worked out.
The Bank of England sets a consumer price target of two percent in order to keep inflation low and stable.
CPI takes no account of housing costs but factors in all the other goods and services.