Higher food prices kept UK inflation at 2.1 per cent for the third month in a row in December, remaining stubbornly above the Bank of England’s 2.0 per cent target.

Those figures, to which the Monetary Policy Committee will have had access, are expected to have played a part in last week’s decision by the BoE body to keep base rates on hold at 5.5 per cent.

The annual Consumer Price Index (CPI) inflation rate of 2.1 per cent was in line with consensus forecasts from Reuters but above the 2.0 per cent indicated by a Bloomberg survey.

The Office for National Statistics highlighted that the strongest price effects came from food, especially vegetables, while clothing and footwear were not discounted as heavily as they had been in the previous year. However, gas and electricity prices fell, as did furniture prices.

Howard Archer at Global Insight, the research firm, said: “The Bank of England is far from out of the inflation woods yet, especially as rising utility bills, elevated food prices and a weaker pound will exert significant upward pressure over the coming months.

"The pace and extent of further interest rate cuts will therefore depend critically on underlying inflationary pressures being contained by ongoing wage moderation and by companies' pricing power being diluted by slowing growth.”

On a month-on-month basis, inflation was up 0.6 per cent in December following a 0.3 per cent rise in November.

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