UK inflation jumps to highest level in 30 years

The inflation rate for the UK jumped to 5.4 per cent in December, its highest rate in 30 years. The result of this is heightening a cost of living crisis and squeezing household incomes. The large annual rise in the consumer price index reflected widespread increases in the cost of most goods and services and again exceeded economists' forecasts of a small rise in December to 5.2 per cent from 5.1 per cent in November. Analyst's expectations for spring levels of inflation is to push even higher, in excess of 6 per cent, with gas and electricity prices being a large contributor to this. All of this is putting ever more pressure on the Bank of England to raise interest rates, who, having failed to anticipate the surge in inflation, now have a problem. They face pressure to raise interest rates to cool spending and bring inflation down towards its 2 per cent target, but does not want to squeeze household budgets too far and undermine the recovery.