Britain is heading head first towards another cost of living crisis. Figures released by the Office for National Statistics (ONS) show inflation rose to 3.1 per cent last year – up from 2.9 per cent the month before.

Figures from 2020

Figures from 2015

‘Sharp’ rises in petrol and diesel costs were the main driver, the ONS said, with air fares making a considerable contribution too.

The Chancellor, John Healey, put the blame on global events, saying: ‘The war in the Middle East is impacting on inflation worldwide, not just here at home. In our bills, our weekly shop and at the petrol pumps.’

Healey isn’t wrong that global factors have driven up fuel costs, but he fails to acknowledge that our perilous public finances, already vulnerable energy system and sky-high taxes make Britain much more susceptible to inflation than almost anyone else

Healey isn’t wrong that global factors have driven up fuel costs, but he fails to acknowledge that our perilous public finances, already vulnerable energy system and sky-high taxes make Britain much more susceptible to inflation than almost anywhere else.

All eyes now turn to Threadneedle Street, where the Bank of England announce their latest interest rate decision tomorrow. At the moment the Bank are expected to hold rates at 3.75 per cent, but market expectations are that a series of hikes are coming.

The danger is that all of this comes together to create a trap for Andy Burnham and John Healey. Forecasts now expect the energy price cap to be increased by 25 per cent in January, taking it close to the levels Liz Truss felt she had to intervene at.

At that point Burnham may feel he cannot resist a massive energy spending spree. Trouble is he’d be doing so from a much worse starting point than Truss.

There is one glimmer of hope though: energy inflation does not seem to be passing through, yet, to food and other goods. If it does, a new inflationary crisis will certainly take hold.