Food costs push up inflation
Inflation soared last month with the Consumer Prices Index (CPI) rising to 3.7%, up from 3.3% in November, as the cost of food rose sharply.
Retail Prices Index (RPI) inflation - which includes mortgage interest payments - rose to 4.8% from 4.7%.
The recent VAT rise from 17.5% to 20% could further fuel inflation, which has now remained above the 2% target by one percentage point or more for 13 months.
The Office for National Statistics (ONS) said the biggest drivers of inflation were air transport, fuel, utility bills and food costs.
Commenting on the latest inflation data James Walton, chief economist at IGD, said: “The latest CPI data shows UK shoppers continue to be exposed to a range of global forces which are pushing up the cost of living, particularly food.
“Consumers understand what is going on and anticipate these forces will continue to affect them into 2011. Our ShopperTrack research shows that 88% of shoppers expect food prices to increase in the next 12 months.
“Shoppers themselves have begun to use a range of practical techniques in response to this such as meal planning, comparative shopping, use of the internet and combining their weekly shop with friends and family.”