Inflation rate rises to 3.1 per cent

The rate of Consumer Prices Index (CPI) inflation unexpectedly rose to 3.1% in November, from 3% in October, the Office for National Statistics (ONS) said.

It is the highest the rate has been at in nearly six years - the last time it reached above 3% was in March 2012.

The increase will put further strain on British households in the run-up to Christmas as wage growth lags at just 2.1% on average.

Mark Carney, the Head of the Bank of England, will now have to send a letter to Chancellor Philip Hammond explaining why the cost of living is rising.

The Government has set a CPI target of 2%, with protocol dictating that the Bank must contact Mr Hammond if inflation exceeds 3% or falls short of 1%.

It had been expected that when the rate hit 3 per cent in October that it had peaked and would go down in the coming months but the latest figure goes against this theory.

In real terms the average wage is now below what they were in 2008 when the financial crisis began, making the 3.1 per cent rate a significant blow to households.

The move will also pose fresh questions to the Bank's interest rate-setting Monetary Policy Committee (MPC) about whether or not inflation has topped out.

The ONS said that rising costs for food, fuel and computing equipment all pushed CPI upwards.

That inflation was also boosted by air fare costs, which dipped down in November but not by as much as the same time last year.

Other inflation measures showed a mixed picture.

The Retail Prices Index (RPI), a separate measure of inflation, was 3.9 per cent last month, down from 4 per cent the month before.

The Consumer Prices Index including owner-occupiers' housing costs (CPIH) - the ONS' preferred measure of inflation - was 2.8 percent in November, unchanged from October.

Mel Stride, financial secretary to the Treasury, said: "Inflation is expected to fall over the coming year, but I recognise families are feeling a squeeze now.

"We are determined to help, which is why the Autumn Budget cut income tax, boosted basic pay by more than inflation and froze alcohol and fuel duties."

Credit: PA