The UK Consumer Price Index (CPI) annual inflation rate rose to 3.3% in November, up from 3.2% in October. Meanwhile, the Retail Price Index (RPI) indicates a 0.2% rise in inflation which brings the inflation rate up to 4.7% from 4.5%.
CPS inflation remains well above the government target of 2%, which means the UK consumers are getting less value for money.
The November official stats shocked the City as most financial forecasters were expecting the UK inflation rate to stay flat or dip slightly in November. The major price rises were within food, clothing and furniture categories, according to the Office for National Statistics (ONS).
Food and soft drink prices rose 1.6 per cent last month, the fastest rate ever recorded for the time of year. Fruit prices soared by 7.5 per cent in a month following a series of disastrous harvests around the world. The Bank of England predicts that inflation is to remain high in the months to come, maybe pushed higher by rises in VAT from 17.5% to 20% at the start of 2010.
Many now believe this will provide a screen that will allow retailers to put increase prices and blame the inflation and VAT rises. A report released by KPMG on Tuesday said that 60% of retailers and consumer product manufacturers planned to increase their prices over and above the VAT rise.