Every month the story is the same. The annual inflation rate goes up and the chancellor puts out a statement saying he understands life is tough for the British public.

The only real difference between this month and last was that, in the interim, Rishi Sunak announced his package of measures to soften – but by no means fully offset – the blow from the huge increase in energy costs households are facing in April.

The whopping 54% increase to the average domestic bill will alone add 1.6 percentage points to the annual inflation rate, making the latest figures released by the Office for National Statistics for the cost of living in January something of a temporary respite.

Even so, there was still a rise in the annual rate – as measured by the consumer prices index – from 5.4% in December to 5.5% last month. The figure was actually a bit worse than it looked, because without a temporary fall in petrol prices it would have been higher.

Elsewhere, the January sales were less generous than a year ago. As usual, clothing and footwear retailers and shops selling household goods dropped their prices in the new year but the bargains were less generous this January. Clothing and footwear inflation rose from 4.2% to 6.3% because outlets dropped their prices by 4.9% in January 2021 but by only 2.9% last month.

Inflation will rise further in the coming months. As motorists are now discovering, January’s drop in petrol prices has been reversed. The temporary reduced VAT rate of 12.5% for the hospitality sector will expire in April, the same month energy bills go up. One other factor is that based on a survey of what households are actually spending money on each month, the ONS has made changes to the weightings of the various goods and services it includes in its inflation basket. Greater weight is being given to items analysts expect to rise fastest.

Two other things will concern Bank of England policymakers. The first is that core inflation – the increase in the cost of living excluding volatile elements such as food and fuel – has continued to rise, hitting 4.4% in January.

The second is that producer prices – which provide a guide to inflationary pressures at an early stage in the pipeline – rose at an annual rate of 9.9% in January, up from 9.3% in December.

Inflation is already running at its highest level in almost 30 years. Even on the assumption that there is no more bad news in the meantime, it will peak at between 7% and 8% in the spring. There will be more “I feel your pain” messages from the chancellor. And pressure on him to offer more tangible support.

The rise of crypto means tougher scrutiny

Even though Meta (formerly Facebook) has scrapped plans for its Diem stablecoin, it is clear cryptocurrencies are now a permanent feature of financial markets. Banks and hedge funds now buy and sell crypto assets as a matter of course and there is already an array of complex derivatives that involve crypto products for investors to choose from.

Crypto assets, in other words, are becoming increasingly interconnected with the traditional financial system. However, it is by no means obvious how robust they would prove in the event of an unexpected run on them. Structural vulnerabilities, including a lack of reserves, might quickly appear.

If this all sounds eerily familiar that’s because history is in danger of repeating itself. The buildup to the global financial crash of 2008 was marked by the rapid growth of under-regulated new financial instruments which only a few people purported to understand and were sold to punters who didn’t really know what they were buying.

Despite all the hype around bitcoin, at $2.6tn (£1.9tn) the crypto market is still relatively small, but it grew by 3.5 times in 2021, according to the latest report from the Financial Stability Board, the risk-monitoring watchdog for the G20 group of developed and developing countries.

The FSB has noticeably toughened up its stance, and rightly so. Having been asleep at the wheel in the early 2000s, those responsible for supervising the global financial system – central banks and regulators – need to avoid making the same mistake twice.

Regulators have no wish to put an end to the innovation that led to crypto assets, and couldn’t even if they wanted to. They also know the financial risks could snowball in the comings and the time to put in place the necessary regulatory safeguards is now, before it is too late.