Inflation set to rise in run-up to summer

The rate at which general prices are rising was unchanged last month at 2.7 per cent - but a rise to 3 per cent by summer is expected, according to official figures released today.

The Office for National Statistics said the Consumer Prices Index (CPI) was unchanged in December because a fall in fuel costs was offset by price increases from four of the "big six" energy suppliers.

However the Retail Prices Index (RPI), which includes housing costs, rose to 3.1 per cent from 3 per cent the month before.

Unison general secretary Dave Prentis told the government to "get a grip" as freezing weather starts to bite, fuel bills continue to rise and wages remain stagnant.

"The reality is families are struggling to heat their homes in the face of massive price hikes and freezing weather and put food on the table," he said.

"Unscrupulous payday loan companies are filling the gap that has been created by high unemployment, the public sector pay freeze, and soaring fuel costs."

He pointed out that inflation still remains well above the government's 2 per cent target.

Child Poverty Action Group's Tim Nichols looked to the future and said families "will be left hostage to fortune" if inflation goes up beyond Treasury projections, as some economists are now warning.

Economists say that with food inflation set to increase over the coming months after poor British harvests due to last year's severe wet weather, the CPI could head for 3 per cent by summer.

Above-target inflation is also proving a headache for Bank of England policymakers weighing up mounting signs of economic gloom - the economy is heading for an unprecedented triple-dip recession.