Economist predicts 3% inflation by the summer

Philip Shaw, chief economist at Investec Securities, is pencilling in a rise to 2.9% last month and warned that CPI is heading for 3% by the summer:

This is getting close to the level - above 3% - where Sir Mervyn King or his successor Mark Carney would have to write another explanatory letter to the Chancellor.

We think this is likelier than not to happen, but on our profile we do not expect it until around mid-year

Price increases from four of the "big six" energy suppliers came into effect by the end of December in a winter blow to consumers.

It is thought that this will have been partially offset by lower fuel costs as oil prices have fallen, while food inflation is also likely to be below the 1.4% jump seen a year earlier.

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Inflation remains at 2.7%

The rate of consumer price index inflation remained unchanged at 2.7% in December, official figures showed.