Samuel Tombs, an analyst at Capital Economics, said inflation looked set to hover between 2.5% and 3% for the best part of the next year, as further increases in utility and food prices kick in.
With annual growth in average earnings at 1.3% in October, it means the squeeze on households' spending power will persist throughout 2013. But Mr Tombs added:
We have not lost faith in our view that the large amount of spare capacity in the economy will mean that inflation will eventually fall to a very low rate.
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