UK inflation hits two-year high of 1.6%

Air fares, imported raw materials, food and petrol price rises plus Brexit-fuelled fall in pound will squeeze family finances in 2017

Inflation has jumped to the highest rate for two-and-a-half years, hitting 1.6% as the pound's sharp drop since the Brexit vote continues to push up costs in the UK.

Official figures for December showed air fares, food prices and fuel all helped to drive the rise from 1.2% in November. The December rate, as measured on the consumer prices index (CPI), was the highest since July 2014 and higher than forecasts for 1.4% in a Reuters poll of economists.

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