Inflation Rises to 3.7 per cent

The rising cost of fuel and food caused inflation to hit 3.7 per cent in December, up from 3.3 per cent in November. As Faisal Islam reports, this could lead to a rise in interest rates.

Link to the article: Channel 4 News



The Consumer Price Index tracks everyday costs like petrol, utility bills, food and air fares and is used by the Government to measure inflation. The rise in December to 3.7 per cent was the biggest month on month rise since 1996.The only sign of a fall in living costs came in the clothing sector, where the bad weather put pressure on retailers to offer competitive prices.

The rise was partly driven by domestic pressures, as a cold winter damaged vegetable crops, leading to a 1.6 per cent increase in the cost of food. Gas price rises added to the cost of household services, which rose by 1.4 per cent.

But global influences played a large part. Droughts and fires around the world, including in Russia, led to a shortage of bread and grains. Experts are also pointing to an impact from US monetary policy, which has been encouraging risky investment in commodities.