Inflation leaps to highest level for two years

Inflation jumped to a two-anda-half year high last month as the price of air fares and food rose more sharply than expected.

The Office for National Statistics said the Consumer Price Index measure of inflation hit 1.6%, up from 1.2% in November and the highest level since July 2014.

Economists had expected a 1.4% rise.

Separate figures for the Producer Price Index showed factory gate prices rose 2.7% year-on-year in December as manufacturers started to pass on higher input costs following the collapse of the pound.

Pantheon Macroeconomics chief economist Samuel Tombs said inflation is likely to rise above 2% this month.