An economist has warned the positive news of falling inflation is “masking worse than expected news on living standards”.
On Wednesday, the Office for National Statistics (ONS) revealed the rate of Consumer Prices Index (CPI) inflation had fallen to 10.5% in December, down from from 10.7% in November.
Economist Jack Leslie, from think tank Resolution Foundation, argued the numbers didn’t necessarily mean the cost of living crisis was easing, and he was particularly concerned with rising food and energy prices.
Food and drink inflation soared yet again to 16.8% in December up from 16.4% in November, marking the highest level since September 1977.
Watch: The worst is not yet over for consumers - falling inflation is not the same as falling prices
Leslie tweeted: “The latest ONS inflation stats were released this morning and on the face of it there's good news: CPI inflation fell from 10.7% to 10.5% (in line with expectations).
“But I think this is masking worse than expected news on both living standards and for the Bank of England.”
He added: “Food inflation in particular is concerning: it continues to rise (now up to a staggering 16.9%).
“It's still the case that inflation is much higher for the most basic essentials (food and heating)."
When the Resolution Foundation estimated average inflation rates across the income distribution, the poorest tenth still faced an inflation rate almost 3% higher than the richest tenth.
As well as soaring food inflation, energy costs are also set to surge once again in the spring when the government scales back its support package, capping gas and electricity bills at £3,000 a year, up from £2,500 currently.
It was also revealed the Hackney Foodbank had been forced to launch an emergency appeal for funding as it struggled to cope with demand amid the “toughest time in living memory”.
The organisation, located in east London, said its costs for buying food were set to hit £250,000 this year.
Foodbanks in the Trussell Trust network distributed over 2.1 million food parcels in 2021-2022 for the first time outside of the first year of the pandemic.
It was an increase of 14% compared to the same period in the previous financial year and 832,000 of the parcels went to children.
Meanwhile, the government has pledged to help halve inflation by the end of 2023 as it tries to tackle to cost of living crisis.
Chancellor Jeremy Hunt said: “While any fall in inflation is welcome, we have a plan to go further and halve inflation this year, reduce debt and grow the economy – but it is vital that we take the difficult decisions needed and see the plan through.”
But Labour has hit out at the Conservative Party's economic policies and said inflation was still five times the 2% target.