Inflation jumps to 3.7% as commodity prices soar

Inflation edged closer towards 4% in December as the rising cost of food and oil products continued to hit the price of goods and services.

The annual Consumer Price Index (CPI) rate has now reached an eight month high at 3.7%, up from 3.3% in November. Annual inflation as recorded by the retail prices index (RPI), including mortgage interest payments, stood at 4.8% in December from 4.7% in November. Today's figures are likely to increase calls for the Bank of England's Monetary Policy Committee to up the base rate to combat the increasing inflationary pressures on the UK economy. However, some analysts warn such a move would "choke off" the tentative recovery. The recent VAT rise from 17.5% to 20% could further fue...