UK inflation hit a 30-year high of 6.2% in February as measured by the consumer prices index (CPI), up from 5.5% in the previous month.
Insurers have warned that the duration of high inflation could be as serious as its peak and that it is vital for people continue to protect what is most important to them during this period.
The data has been released ahead of the Spring Statement speech this afternoon in which chancellor Rishi Sunak is expected to introduce some measures to arrest the cost of living crisis – including a possible cut to fuel duty.
And this morning MetLife released data which showed 25% of people have no disposable income to fall back on should they need it and almost a third (29%) said their finances had worsened thanks to the ongoing pandemic.
MetLife head of individual protection Rich Horner said as people contend with yet another increase to inflation, it is important that individuals and families are as prepared as they can be to ensure they have taken care of what is important to them.
“Whether it is household bills, family sports activities or financial protection, how paying for these costs are prioritised will vary based on individual circumstances,” he said.
“But when the global backdrop is uncertain, often protection is one of the few purchases that can help enhance peace of mind at times like these.
“We need to support and encourage people to review what solutions are out there in the immediate future but also the longer-term, such as financial protection.
“Ultimately, it’s important that people plan today to help their future selves to feel and become financially resilient and plan for the unexpected. If the last two years has taught us anything, it is that the most unexpected of circumstances can arise when we least expect it.”
Prolonged high inflation is bad news
Also commenting on the data, Andrew Tully, technical director at Canada Life, said with inflation already at a record 30-year high, and tipped to reach 8% by the mid-year, the worst was yet to come. But he added focussing on the peak, when it comes, was only part of the story.
“It’s the duration of high inflation that will continue to deliver bad news,” he said.
“How long inflation remains well above the 2% target will determine our real living standards for years to come.”
This was echoed by Jack Leslie, senior economist at the Resolution Foundation, who warned this latest rise in inflation was a foretaste of the “huge income squeeze” coming this year.
“This prolonged period of high inflation – which millions of people have simply never experienced before – is a complete disaster for living standards. It will mean pay packets continuing to shrink, along with vital income support such as Universal Credit and the State Pension,” Leslie added.
“The chancellor will need to set out a bold response to this cost of living crisis in his Spring Statement today, starting with ensuring that benefits keep pace with inflation over the coming 12 months, rather than shrink by £10bn as they are currently on course to do.”