The consumer prices index measure of inflation rate rose to 1.6% in the year to December 2016, according to the Office for National Statistics (ONS).

The rate was up from a 1.2% rise in the year to November 2016.

The ONS listed rises in food prices, air fares and falls in motor fuels as the main contributors to the increased rate between November and December.

The announcement prompted a range of reaction from industry and professional bodies.

The Resolution Foundation

Responding to the figures, Conor D’Arcy, policy analyst at the Resolution Foundation, said:

“Today’s sharper than expected rise in inflation shows that the ultra-low price rises that consumers have benefitted from in recent years is well and truly over.

“That’s still low historically, but a significant rise to which wage growth has so far failed to respond.”

Aegon

Kate Smith, head of pensions at Aegon, said:

“Many of those with defined benefit pensions will have some built in pension increases which protects them to some extent from rising costs.

“While this provides a great deal of flexibility, people will need to think carefully about how they invest and access their savings to protect against inflation.”

The Share Centre

Graham Spooner, investment research analyst at The Share Centre, said:

“After a bullish start to the year for the market these figures may act as a dampener and get consumers, who are probably only too aware of rising prices, to become a little more cost-conscious especially after the spending spree of Christmas.”

British Chambers of Commerce

Suren Thiru, head of economics at the British Chambers of Commerce, said:

“A period of materially higher inflation is a significant concern for many businesses as it erodes profit margins and stifles their ability to invest and grow, particularly during this time of heightened uncertainty.”

Contact us today about how these figures could affect you and your business.