UK inflation hits 3.1 per cent

The Office for National Statistics (ONS) said that airfares and computer games contributed to the increase.

The most recent data shows that average weekly wages are growing at just 2.2 per cent.

The ONS said that although airfares fell in November - down 10.4 per cent- the decline was not as steep as last year when they tumbled 13.4 per cent.

Data also shows that food inflation has picked up, especially prices for fish, oil and fats, such as butter and chocolate.

Mark Carney, the governor of the Bank of England, will now have to write a letter to Chancellor Philip Hammond explaining how the Bank intends to bring inflation back to its 2 per cent target.

Mr Carney has to write a letter to the chancellor if the Consumer Prices Index (CPI) inflation rate is above 3 per cent or below 1 per cent.

“Mark Carney will be reaching for his quill pen”, said Royal Bank of Scotland chief economist Stephen Boyle.

“However”, he added, “we are not headed for an era of high inflation. The current burst is largely down to sterling’s depreciation since mid-2015. That effect will wane during 2018 but perhaps not as quickly as the Bank had expected at the time of its November Inflation Report. Oil prices have been rising recently and that is one reason that the input costs inflation for manufacturers has accelerated: in November these producers’ input costs increased by 7.3 per cent year-on-year.”

But head of Pensions at Aegon, Kate Smith, said: “The consensus was that inflation had peaked so today’s figures are about as welcome as a burst water pipe.

“This year household finances have been under far more pressure from the rising cost of living than in any recent years, driven by the fall in the value of sterling. The news that we’ve not yet turned a corner means that people’s incomes are effectively shrinking. It also means that next year’s increase in auto-enrolment contributions is more likely to prove tricky as many employees will see their pension contributions rise from 1 per cent to 3 per cent. The ongoing rise in living costs increases the likelihood that people will stop saving in response to the squeeze on their incomes. This would provide short-term relief from inflation, but is storing up problems for the long-run.”