Largest ever monthly increase for inflation

Inflation climbed 0.6 per cent during December, according to new data from the Office for National Statistics.

As a result, the annual rate of Consumer Price Index inflation rose to 2.9 per cent last month, up from 1.9 per cent in November and the largest monthly increase on record.

The Retail Price Index rose to 2.4 per cent, up from 0.3 per cent the previous month, taking it to its highest level since November 2008.

As a result, CPI has risen above the Bank of England’s target of two per cent for the first time since last May, meaning the governor Mervyn King will probably have to write a letter of explanation to the chancellor when this month’s figures are revealed in January.

Commenting, David Kuo of the Motley Fool described the statistics as ’worrying’.

’Today’s surge in inflation is unlikely to be the last that we hear of rising prices,’ he noted, adding that the rise represents ’a real dent in the purchasing power of the pound in our pockets’.ADNFCR-2318-ID-19564995-ADNFCR