Chancellor Philip Hammond today stressed that he understood cost-of-living concerns of millions of families as inflation hit a two-and-a-half-year high.
Rising fuel prices was a key factor in pushing up inflation to 1.8 per cent last month, from 1.6 per cent in December.
The rise in the cost of living is threatening to overtake wage growth for more and more households across the country.
A Treasury spokesman said: “The Government appreciates that families are concerned about the cost of living and that is why we are cutting taxes for millions of working people and have frozen fuel duty, saving an average driver £130 a year compared to previous plans.”
He added: “Employment has reached record levels and earnings have risen faster than inflation for more than two years.”
The price of petrol rose to 118.6p per litre in January, up from 114.6p per litre the month before, while diesel reached 121.9p per litre last month, up from 118p per litre in December.
Overall food prices were flat between December and January after falling 0.6 per cent a year ago, as the sharp drop in grocery costs - triggered by the supermarket price war - ground to a halt.
Inflation last month was just below City expectations of 1.9 per cent and the Bank of England’s two per cent target.
But it is predicted to rise towards three per cent during the year as more businesses pass on the cost of the slump in the value of Sterling.
Figures for the Producer Price Index showed that input prices - the amount paid for materials and fuel by UK manufacturers - saw its highest rate of growth since September 2008, rising 20.5 per cent in January.
The Pound’s sharp fall against the US dollar and the euro since the EU referendum result, coupled with rising oil prices, also caused import prices to leap 20.2 per cent over the period, the Office for National Statistics said.
ONS head of inflation Mike Prestwood said “The latest rise in CPI was mainly due to rising petrol and diesel prices, along with a significant slowdown in the fall in food prices.
“The costs of raw materials and goods leaving factories both rose significantly, mainly thanks to higher oil prices and the weakened pound.”
