inflation leapt in December with the Consumer Prices Index (CPI) rising to 3.7 per cent, up from 3.3 per cent in November, and the Retail Prices Index (RPI) – which includes mortgage interest payments – hitting 4.8 per cent from 4.7 per cent.
Statistics from the Office for National Statistics for the 12-months to 31st December show heating oil went up by a huge 48 per cent, petrol and diesel increased by 12.9 per cent, cooking oil went up 11 per cent, fish went up nine per cent, fruit went up 8.6 per cent and rail travel rose by 7.4 per cent.
In contrast, cameras and video cameras came down in price by 17.8 per cent and TVs and DVDs were down 8.1 per cent.
These falls were used to keep the huge rise in basic necessities as hidden as possible, and reduce the rise in the inflation rate as much as possible.
Business leaders responded to the figures by begging the Bank of England to resist the pressure to raise interest rates.
The British Chambers of Commerce (BCC), echoing calls made at the weekend by the Ernst & Young Item Club, said the Bank must ‘hold its nerve’ in the face of calls for an early increase in interest rates.
But bankers are saying that interest rate rises are inevitable and must be carried out.
Unison leader Dave Prentis commented on the inflation rise: ‘This is chilling news to hundreds of thousands of low-paid public sector workers, who face pay freezes, job losses, a three per cent hike in pension contributions and a daily battle to put food on the table.
‘The inflation hike comes on top of the 20 per cent VAT rise, soaring prices of transport, petrol, gas and electricity bills and national insurance contributions.
‘Those at the bottom of the ladder also face cuts in housing benefits, disability allowance, council tax benefits and other welfare payments.’
TUC General Secretary Brendan Barber said: ‘The alarming rise in inflation means prices are running well ahead of pay deals.’
He pleaded: ‘Surely it is now time for the Chancellor to use the budget to reconsider the VAT increase.’