British consumer price inflation rose in January to its highest since June 2007, but the rise was smaller than most economists had forecast.
The Office for National Statistics (ONS) said consumer prices fell by a larger-than-expected 0.7 per cent in the month of January. On the year, consumer prices were 2.2 per cent higher, below forecasts for a reading of 2.3 per cent.
The figures may come as a relief to Bank of England policymakers after data yesterday showed factory gate inflation rising at its highest rate in more than 16 years.
Particularly encouraging will be a fall in the core rate of inflation to 1.3 per cent, the lowest rate since August 2006.
The main upward impact came from transport costs, which were up 6.4 per cent on the year - the fastest rate in more than 11 years. The cost of fuels and lubricants rose nearly 20 per cent on the year, the highest rate since records began in 1997.
Retail price inflation, the basis for most wage deals, rose by 4.1 per cent on the year, in line with expectations.