The retail price index, compiled by the Office for National Statistics, shows that inflation rose to 4.4 per cent in December the highest level since 1991.
Another indicator, the consumer price index (CPI), which excludes council tax and housing costs, shows that inflation grew to an annual rate of three per cent, which is the highest since 1997.
The CPI rate is now a full point over the government’s desired target of two per cent.
Some news reports have suggested that the Bank of England (BoE) will be forced to raise the cost of borrowing again, either next month or sometime before the summer.
This would be bad news for mortgage holders and unsecured credit borrowers as any rise in the base rate is likely to place more people into serious debt.
In related news, the National Association of Estate Agents hit out at the BoE’s “disappointing” decision to raise interest rates by 0.25 per cent last week by saying the move was “premature”.