UK inflation jumps to 30-year high of 5.4% as cost of living crisis deepens – as it happened

• Food prices, furniture, clothes and housing costs rise in December
• Unions call on government to draft a plan to tackle cost of living crisis
• Pressure builds for February rate hike from Bank of England
• I'm not getting through the month: five Britons on the cost of living crisis
• UK house prices climb 10% year-on-year in November
• Closing summary

Paul Dales, chief UK economist at Capital Economics, noted:

After rising from 5.1% in November to 5.4% in December, CPI inflation is now further above the Bank of England's target than at any point since the UK first adopted an inflation target in October 1992. What's more, our forecast is that CPI inflation will shoot up to just above 7.0% in April.

That's why we think the Bank will raise interest rates faster than most expect this year, from 0.25% to 1.25%, with the next hike to 0.50% coming on 3^rd February.

Intensifying cost of living pressures, combined with relatively positive GDP and labour market data this month, make it more likely that the Bank of England will consider another modest rise in interest rates in their next MPC meeting in February.

However, given it takes around 12-18 months for the full impact of an increase in rates to be realised in the economy, inflation is expected to continue to rise in the short-term. This will provide no respite to households being squeezed by rising prices and falling real wages.