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Inflation increases to 2.2 per cent in January

CPI annual inflation increased to 2.2 per cent in January, up from 2.1 per cent in December.

The Office of National Statistics says the largest upward pressures came from a 1.3p increase in the average price of petrol and food prices which fell by less than last year.

Liberal Democrat shadow chancellor Vince Cable says the figures show the Bank of England is “hamstrung” by high inflation in its attempts to cut interest rates and boost growth.

He says: “It is now very clear that we will not get the interest rate slashing that occurred in the USA leaving many people struggling to repay debts and increasing the likelihood of big falls in the housing market.

“The Bank of England is clearly hoping that we will see a fall in inflation in the next 12 months but while high oil and food prices and rising wages continue to push it higher there is a real danger we will end up with a stagnant economy with high inflation.”

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