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  1. ITV Report

UK inflation at highest level since June 2014

Inflation reached a two-and-a-half-year high in January as rising fuel prices bumped up the cost of living.

The Office for National Statistics (ONS) said the Consumer Price Index (CPI) measure of inflation hit 1.8% last month, up from 1.6% in December, marking its highest level since June 2014.

The figure is just shy of the Bank of England's 2% target and economists' expectations of 1.9%.

According to the ONS, the rise in CPI was mainly due to increasing petrol and diesel prices, along with a significant slowdown in the fall of food prices.

A weakened pound following the Brexit vote also contributed to the spike, the ONS said - bumping up import prices and leaving inflation at a two-and-a-half year high.

Meanwhile, both house prices and rents in the UK continued to grow throughout 2016, despite signs of a slowdown in recent months.

The Bank of England predicted inflation would hit 1.9% in January Credit: PA

Economists at the Bank of England had forecast inflation to hit 1.9% for the month of January.

Separate figures for the Producer Price Index showed that input prices - the amount paid for materials and fuel by UK manufacturers - saw its highest rate of growth since September 2008, rising 20.5% in January.

The weakening pound, coupled with rising oil prices, meant that import prices have leapt by 20.2% since Britain's referendum vote.

Ballooning imports, triggered by Sterling's slump against the dollar and euro, are expected to continue to push up everyday prices as companies pass on their soaring costs to consumers.

Inflation has hit 1.8%, marking the fourth month of consecutive growth. Credit: PA

Driving the jump in CPI were transport prices, which dropped by less than they did a year ago - falling by 0.6% between December and January - compared with 2.5% a year before.

Meanwhile, fuel prices climbed 3.4% over the period after dropping by 2.6% a year earlier, with Brent crude increasing in price.

Subsequently, the price of petrol rose to 118.6p per litre in January, up from 114.6p per litre the month before.

Diesel, meanwhile, reached 121.9p per litre last month, up from 118p per litre in December.

The ONS said a rise in the cost of imported foods caused by the Brexit-hit pound may have been a factor in the significant slowdown in the fall of food prices.

"Following a sustained period of deflation of food prices since mid-2014, during which the 12-month rate was often lower than negative 3%, the rate has increased for four consecutive months, reaching negative 0.4% in January," a spokesperson said.