UK inflation hit 3.1% in November, the highest level since March 2012. Recreational goods, including video games, and pricing of airfares provided the largest tailwind. Food and non-alcoholic beverages also rose in value.
This is not the start of the return to a world of 4% or 5% CPI
Within the food segment, fruit and fish saw the largest price inflation, up nearly 9% on a year ago, while the cost of meat fell slightly. The cost of alcohol and tobacco also rose, alongside education and entertainment.
Bank of England Governor Mark Carney will be forced to write a letter to the Government explaining why the central bank has missed the inflation target of 2%. The Governor is instructed to write to the Chancellor when inflation exceeds target by more than 1 percentage point.
Ben Brettell, senior economist at Hargreaves Lansdown says that much of the price inflation is due to the impact of weak sterling.
"When Mark Carney pens his letter to the chancellor he’ll have a ready answer as to why inflation is so high - we’re still seeing the effect of the weaker pound filtering through to prices," he said. "Given Carney and colleagues raised interest rates last month, he’ll also be able to point to the fact that, for once, he’s doing something about it too."
However, Brettell added that he did not expect Carney and his fellow Monetary Policy Committee members to raise rates again when they meet this week.
Ben Lord, manager of the M&G UK Inflation Linked Corporate Bond Fund said there should be some respite for households in the form of wage inflation, but that it will fail to negate the impact of rising prices. The latest wage and employment figures will be announced tomorrow.
"With wages failing to keep pace with the cost of living, consumers could face another squeeze in the run up to Christmas," he said. "The good news is that the fall in sterling has probably now largely passed through to consumer prices. Providing we do not see a renewed fall in sterling, or an unexpected spike in global commodity prices, we think UK inflation may well have peaked for the time being."
Wisdom Tree's director of research Viktor Nossek agreed, saying that he expected inflation has effectively peaked in the UK.
"This is not the start of the return to a world of 4% or 5% CPI, but rather a combination of one-offs which are keeping official numbers at higher levels," he explained.
"Inflation will therefore likely trend lower over time and be contained enough to sustain consumer spending, especially as we continue to see next to no evidence of wage hike inflation."
