Prime Minister Andy Burnham has pledged to do what he can to help Britons through “really hard” times as cost pressures mount after figures showed inflation surging to a four-month high and forecasts for more pain ahead.
Mr Burnham blamed the “effect of the conflict in the Middle East” after official data showed Consumer Prices Index inflation hit 2.9% in July, up from 2.6% in June and the highest level since March.
It followed a 13% hike in Ofgem’s energy price cap last month, which increased the average gas and electricity bill by £221 to £1,862 a year.
Experts at Cornwall Insight are predicting more energy bills misery ahead for the winter months, with their forecast on Wednesday bracing households for a further 4% rise when the next quarterly cap for October to December is announced on August 26.
The Prime Minister vowed to do what he can to help people struggling with rising costs.
Speaking during a visit to the North East, Mr Burnham said: “We can’t control though what is going on in the Middle East, and the effect of the conflict there is now being felt in inflation here, and in other countries around the world.
“But people can be sure that what I can do to help people, I will do, I realise these times are really hard but already people can see a month into office I have done things that will make a difference.”
Chancellor John Healey had earlier said there was “more to do to restore hope and build a stronger economy” following the inflation data.
The inflation figures come amid a painful day for consumers, as the data also set the stage for a possible 4.2% rise in regulated train fares in England next year.
Annual rail fare calculations are based on the Retail Prices Index rate of inflation, which rose to 3.2% last month from 3% in June.
And separately on Wednesday, the Competition and Markets Authority revealed probes into Trainline, Virgin Atlantic and RED Driving School over concerns customers were not being shown full prices up front.
With no signs of an end to the Iran war, experts are forecasting more cost-of-living pressures ahead, with some suggesting inflation could peak at 3.5% before the end of the year as energy and fuel prices surge.
Matt Swannell, chief economic adviser at the Item Club, said: “July’s uptick in inflation will mark the start of a sustained increase in inflationary pressures over the rest of the year.”
The Office for National Statistics said the steep rise in the July to September energy cap was driven by the biggest rise in gas prices for almost four years.
And with oil prices back up above 90 US dollars a barrel, higher costs at the fuel pumps will also start to filter through to inflation.
Shadow chancellor Sir Mel Stride said it was not only the Iran war that was to blame for rising inflation.
He said: “Labour’s tax rises and business bashing have driven the cost of living higher and higher, yet Andy Burnham refuses to rule out yet more tax hikes at the Budget.
“Labour’s economic mismanagement has left us unprepared for global shocks, with the UK having the highest inflation in the G7 at the start of the Iran crisis.
“It is ordinary people who are left paying the price.”
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