UK inflation soars at fastest pace for nine months

UK inflation rose at the fastest annual pace for three quarters in December, according to the Office of National Statistics.

Consumer prices rose 0.6% last month, taking the annual rate up to 2.9% from 1.9% in November, the biggest monthly rise in the annual index since records began in 1997. The jump significantly exceeded the City's expectations for an increase to 2.6%. Retail Price Index (RPI) inflation also rose, up to 2.4%, its highest level since November 2008. Azad Zangana, European economist at Schroders, cites energy price falls at the end of 2008 and the VAT cut from 17.5% to 15% in December 2008 as key reasons for the pick-up. But he adds: "Worryingly, core inflation, which excludes volatil...