November provided brief respite from the coming increases, the latest ONS figures show, as did a fall from 3.2pc to 3pc in the retail prices index, which is seen as a better proxy for the cost of living than the CPI as it includes housing costs.
However, the underlying upward pressures on prices were evident in the measure of core CPI, which strips out volatile fuel and food prices. Core CPI held steady at 2.6pc despite pre-Christmas discounting on the high street.
Howard Archer, UK economist at IHS Global Insight, said: ?It still looks very possible that increased energy tariffs and higher food prices could push consumer price inflation up to 3pc early in 2013 and keep it there for a while. Further utility price hikes will kick in during December and January.?
He welcomed the lower petrol prices ? which fell 3p a litre on the month to ?1.35 while diesel prices dropped 1.5p to ?1.42 a litre ? and a moderation in producer price inflation, which indicated that ?price pressure are easing further down the [supply] chain?.
Offsetting the petrol price falls was a 3.9pc annual increase in the cost of food and non-alcoholic beverages. Much of the increase was accounted for by the rising prices of staples such as bread, cereals, fruit and vegetables, as challenging weather conditions suppressed crop yields throughout 2012.
The drop in RPI inflation was partly due to the downward effect of mortgage interest payments which feature in the CPI but not in the RPI.
A Treasury spokesman said the Government is trying to mitigate the impact on poorer households. ?At the Autumn Statement, the Government took more action to help households with the cost of living including a further increase in the tax-free personal allowance and cancelling the fuel duty increase that was planned for January,? the spokesman said.
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