Inflation hits highest point in two years

23 January 2017 - Janet Bird


Inflation hit its highest point in over two years in December, as the weak pound led to shop price increases.

Figures from the Office for National Statistics showed inflation topped 1.6 percent last month, with food price hikes among the main contributors to the rise.

The size of the increase surprised analysts, who had predicted the Consumer Price Index (CPI) - which measures inflation - would rise by 1.4 percent, building on a 1.2 percent rise in November.

Another key measure of inflation - the Retail Price Index (RPI) - also rose by 2.5 percent in December, up from 2.2 percent in November.

But although the rise is greater than expected, the inflation rate remains below the Bank of England's target and is still low by historical standards.

There has been a sharp rise in the cost of vegetables and, despite the ongoing supermarket wars, food prices are beginning to increase - particularly on imported goods.

With the pound showing no immediate signs of recovery, such price rises may be with us for some time to come.

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