Breaking news: CPI inflation hits 4%

CPI inflation rose to 4% last month, up from 3.7% in December, according to new figures.

The Office for National Statistics said the increase in VAT to 20% and a continued growth in the price of crude oil were the main factors behind the rise.

CPI is now at its highest since November 2008, adding to the pressure on the Monetary Policy Commitee to raise interest rates.

Graeme Leach, chief economist at the IoD, said: “Inflation at 4% is double the target rate but this does not mean that interest rates have to rise. With money supply growth close to zero it is hard to believe that inflation is moving out of control.

“Money supply growth still suggests that the medium term threat is deflation not inflation. We’re in for a roller coaster ride as inflation heads north this year and south next year.”

RPI inflation was for the year to January was 5.1%, up from 4.8% the previous month. The RPIX rate – RPI excluding mortgage payments – rose from 4.7% to 5.1%.

In the year to January, RPI annual inflation was 5.1 per cent, up from 4.8 per cent in December. The main factors affecting the CPI also generally affected the RPI.

RPIX inflation – the all items RPI excluding mortgage interest payments – was 5.1 per cent in January, up from 4.7 per cent in December.