Inflation has unexpectedly risen in Britain, more than what was forecast.
Inflation is driving up prices at their fastest rate since 2014. It is believed that the weaker pound is behind the inflation increase.
Office for National Statistics (ONS) data revealed that the Consumer Price Index (CPI) showed inflation had risen 0.3 percent in December to the new high of 1.6 percent. In October it was 0.9 percent and in November, 1.2 percent.
Most had predicted December’s inflation to be at 1.4 percent. The higher than expected inflation has worried the government due to the impact on the cost of living.
“The highest CPI has been for over two years”
Mike Prestwood of the ONS said, “This is the highest CPI has been for over two years, though the annual rate remains below the Bank of England’s target and low by historical standards.
“Rising air fares and food prices, along with petrol prices falling less than last December, all helped to push up the rate of inflation.
“Rising raw material costs also continued to push up the prices of goods leaving factories.”
“Inflation is back with a vengeance”
Investment director for Personal Investing at Fidelity International, Tom Stevenson, said, “Inflation is back with a vengeance.
“The weakening pound continues to drive prices higher and today’s CPI reading of 1.6 per cent on the back of rising fuel, food and air fares is significantly higher than expected.
“With more hints from the UK Government that a hard Brexit is on the cards, we could see sterling fall even further in the lead up to the Prime Minister pulling the trigger on Article 50.
“This will translate into further inflation in the short term.”
RAC data shows that petrol prices rose about 3p per litre in December, driven by higher oil costs. While rising import costs have been passed on to consumers driving up the cost of food.