UK inflation rate hits two-year high at 4%
Pressure on the Bank of England to raise interest rates intensified today as inflation increased to its highest level in more than two years in January.
The Consumer Prices Index (CPI) rose to 4% last month, from 3.7% in December, the Office for National Statistics (ONS) said, as the increase in VAT from 17.5% to 20% and the soaring cost of crude oil pushed up the cost of living.
Today's CPI figure, the highest since November 2008, is double the Government's 2% target and is likely to throw weight behind the argument for hiking interest rates from a historic low of 0.5%.
As inflation has been more than 1% above target for three months, it will trigger a letter of explanation from Bank of England Governor Mervyn King to Chancellor George Osborne.
The underlying rate of Retail Prices Index (RPI) inflation rose to 5.1% in January from 4.7% in December, the ONS said.