LONDON: British consumer price inflation leapt to 7.0% in March, its highest since March 1992 and up from 6.2% in February, official figures showed on Wednesday, intensifying the cost-of-living squeeze faced by households.

The increase in the annual rate of CPI was sharper than expected by most economists polled by Reuters, who had forecast an increase to 6.7%.

“Broad-based price rises saw annual inflation increase sharply again in March,” the Office for National Statistics’ chief economist, Grant Fitzner, said. “Amongst the largest increases were petrol costs, with prices mostly collected before the recent cut in fuel duty, and furniture.”

British inflation has seen an unprecedented surge over the past year, following a similar pattern to most other advanced economies as energy prices surged and pandemic supply-chain difficulties persisted.

Russia’s invasion of Ukraine on Feb. 24 has pushed energy prices higher, and last month Britain’s Office for Budget Responsibility forecast CPI would peak at a 40-year high of 8.7% in the final quarter of 2022.

Financial markets think the Bank of England is all but certain to raise interest rates to 1% from 0.75% on May 5 after its next meeting before taking them to 2%-2.25% by the end of 2022, though many economists it will not move that aggressively.

UK unemployment dips further but wages slide

Faster inflation and higher payroll taxes are leading to the biggest squeeze on British household incomes since records began in the late 1950s. The BoE forecasts economic growth will slow sharply over the course of this year.

Wednesday’s data showed that core CPI, which excludes food, energy, alcohol and tobacco prices, rose to 5.7% in March from 5.2% in February.

Retail price inflation – an older measure which the ONS says is inaccurate, but which is widely used in commercial contracts and to set interest payments on inflation-linked government bonds – rose to 9.0%, its highest since 1991.

There were signs of further inflation pressure ahead as manufacturers increased their prices by 11.9% over the 12 months to March, the biggest jump since September 2008.

Manufacturers’ raw material costs leapt by 19.2%, the biggest increase in records began in 1997.