Inflation reached a record nine month high in December prompting fears that interest rates might rise sooner than expected.
At 2.9 per cent year on year it is importantto remember that one year ago Vat was cut but there does seem to have been attempts by retailers to capitalise on higher demand.
It must also be remembered that 12 months ago,oil prices were at record lows as the world economy plunged to new depths.
So should we be worried?
Many analysts are still upbeat on the chances of inflation eventually coming back to target.However today's news saw gilt and interest rate futures plunging as markets bet the Bank of England may have to start tightening monetary policy sooner than planned.
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