The UK Consumer Prices Index has risen to 3.1% in November – its highest level since March 2012.
The CPI edged up from 3% in October to 3.1% in November amid rising air fares and higher prices across leisure activities and food and drink.
The Office of National Statistics said food and non-alcoholic drink prices were up 4.2% in the year to November 2017 – the category’s highest level of inflation for four years.
The category accounted for 0.41%pts of headline inflation this month, compared to a contributing a reduction of 0.21%pts in the corresponding period last year when it was the only CPI category in decline.
This month, rising prices for a range of recreational and cultural goods and services, most notably computer games, had an upward effect on inflation.
The recreation and culture sector added 0.46%pts to inflation this month, while restaurants and hotels drove 0.41%pts.
Transport contributed 0.7%pts to the overall inflation total, largely to increasing prices for motor fuels, reflecting increases in global oil prices together with the fall in the value of the pound
Richard Lim, chief executive, Retail Economics said the inflationary pressure is occurring “at precisely the wrong time for retailers”.
He said: “In the run-up to Christmas, the cost of living, now rising at the fastest rate in five years, remains uncomfortably high for households. Food inflation is at a four-year high and for many families, this is one of the most transparent indicators of living costs and often the catalyst to cut back on spending elsewhere.”
However, he predicted inflation will fall fairly sharply, to around 2.5% by Easter.
“This will ease the financial pinch on households and we expect real earnings growth to resurface by mid-2018,” he said.
Shore Capital’s Clive Black said the jump in CPI to 3.1% should still be ”largely manageable for the majority of UK households”.
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