The Consumer Price Index rate of inflation rose by 1.2 per cent in the year to November 2016, the highest rate since October 2014 when it was 1.3 per cent, the Office for National Statistics has said.

This compares to 0.9 per cent recorded in the year to October 2016. The ONS said rises in the prices of clothing, motor fuels and a variety of recreational and cultural goods and services, most notably data processing equipment, were the main contributors to the increase in the rate. However, these were partially offset by falls in air and sea fares.

Commenting on the results, Brown Shipley deputy chief investment officer and senior fund manager Alex Brandreth said: “The inflation environment in the UK is under a degree of upward pressure from sterling’s devaluation and the recovery in the oil price but the broader macro environment is not conducive to accommodating such an impulse.

"We are in a world where high debt levels mean that future purchasing and demand will be lower. In particular, concerns about Brexit will undermine the confidence companies have to pass on cost increases.

“You would expect to see the Bank of England increasing interest rates to “contain” inflation. However, the Bank is looking through the current increase because it sees it as temporary and it is also concerned about stimulating growth in the underlying economy.”

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