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January - RPI/CPI figures - Inflation up to 3.7%

Upward pressures in the price of air transport, fuel, gas and food caused CPI annual inflation to rise to 3.7% in December, up from 3.3% the month before, according to the latest figures released by the ONS this week.

Although air fares rose only slightly more between November and December 2010 than for the same period a year ago the weight for air transport was higher in 2010 than in 2009 meaning that the rise had a larger upward impact on the CPI than the previous year. Fuels and lubricants saw price rises of 2.8% -- the largest rise for the November to December period since 1996. In food, prices rose by 1.6%, the largest ever rise between a November and December period.

In the year to December RPI annual inflation was 4.8%, rising slightly from 4.7% the month before.

The figures follow last week’s publication of the BRC-Nielsen shop price index for December which showed overall shop price inflation increased to 2.1% in December up 0.1% from the previous month while food inflation was unchanged at 4% in December.

The early and deeper pre Christmas discounting helped to slow down prices rises but the future doesn’t look so bright, according to Stephen Robertson, British Retail Consortium Director General.

“Overall shop price inflation is well below the wider Consumer Price Index, though price increases in some non-food goods pushed that figure up slightly compared with November. That’s consistent with warnings from some retailers that inflationary pressures are working through to prices."

He believes that with next month’s figures to be the first to show the impact of the VAT rise, retailers will continue to try to limit price rises.

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