UK inflation at highest for 2 years
Inflation was at its highest in December since July 2014
Inflation rose to 1.6% between December 2015 and December 2016, a sharp rise when compared with a 1.2% rise between November 2015 and November 2016.
Inflation is the rate at which the prices of goods and services bought by households rise or fall. A change of 1.6% over a year means that a “typical” basket of goods and services that cost households £100.00 in December 2015 would have cost them £1.60 more in December 2016.
The Office for National Statistics said that one of the main contributors to the rate increase was a rise in air fares. In 2016 air prices rose by 49% between November and December compared with a smaller rise of 46% in 2015.
According to the BBC, economic forecasters have predicted that inflation could rise above the Bank's 2% target as a result of the pound's weakness since the Brexit vote.
A more detailed explanation on how inflation is calculated can be found below;
Infographic by Office for National Statistics (ONS)