Inflation rises to 30-month high of 1.6%

The rate in December was the highest since July 2014, when it was also 1.6%.

Price movements for the majority of the broad groups of goods and services acted to increase the rate between November and December.

The main contributors to the increase in the rate were rises in air fares and the price of food, along with prices for motor fuels, which fell by less than they did a year ago.

CPIH, which the ONS will adopt as its preferred measure of inflation in March, rose by 1.7% in the year to December 2016, up from 1.4% in November.

In December, the MPC said it expects inflation to rise to its 2% target within six months - quicker than expected.

Industry experts now believe that racing inflation figures will put pressure on the Bank of England to raise rates sooner.

Tom Stevenson, investment director for Personal Investing at Fidelity International, said: “Inflation is back with a vengeance. The weakening pound continues to drive prices higher and today’s CPI reading of 1.6% 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. Indeed, some of Britain’s biggest retailers have already warned that they may have to raise prices as they are forced to pass on higher costs of importing goods from abroad to customers."