Inflation has hit its highest rate for two-and-a-half years, driven by the dramatic slowdown in falling food prices since the EU referendum and rising fuel costs at the pumps.
The Consumer Prices Index (CPI) measure of annual inflation rose to 1.8% last month, up from 1.6% in December, the Office for National Statistics (ONS) said today.
It’s the fourth month in a row that the rate has climbed and is the highest level of inflation see since June 2014.
The decline in the value of sterling since the Brexit vote in June has made imported goods more expensive and pushed up costs for food producers across the country.
Petrol rose to 118.6p per litre in January, up from 114.6p the month before and 101.8p a year earlier, jumping further to a two-year high in February.
Food prices also contributed to the inflation increase, with prices flat between December and January, having fallen a year ago.
Clothing and footwear prices, however, offset rises elsewhere as the high street attempted to keep shopper on the high street in January.
“The strong downward pull on inflation seen in recent years for prices for food has lessened considerably over the last four months,” the ONS said. “The 12-month inflation rate for food stood at negative 0.4% in January 2017, the highest since June 2014.”
ONS Head of Inflation Mike Prestwood added: “The latest rise in CPI was mainly due to rising petrol and diesel prices, along with a significant slowdown in the fall in food prices.”
Input prices for UK manufacturers also rose 20.5% in January, the sharpest jump since September 2008, with the prices of goods leaving factories also up 3.5%, according to the ONS producer prices figures.
“The costs of raw materials and goods leaving factories both rose significantly, mainly thanks to higher oil prices and the weakened pound,” Prestwood said.
Earlier this morning a GB inflation watch survey from market research firm GfK revealed 74% of consumers are expecting price rises in 2017, with more than one in three (34%) thinking the hikes will come “more rapidly” than the past 12 months.
The latest Grocer Price Index, measuring the price of 60,000 SKUs, revealed deflation had come to an end in January after more than two-and-a-half years of falling prices. It follows Kantar Worldpanel recording price rises at Christmas for the first time since 2014, which have continued into the new year, with like-for-like inflation on a basket of everyday groceries climbing to 0.7%. The market research group said if prices continued to rise at the same rate for the rest of 2017, shoppers would find themselves around £27 worse off.