Inflation unexpectedly remained at 2.7% in January, the fourth month in a row at this level.
Economists offered little comfort to hard-pressed households with some forecasting inflation could touch 3% in coming months.
The 2.7% figure is the highest since May. The Government’s Office for National Statistics said it was the first time inflation has remained unchanged for four months since records began in 1996.
Investec economist Victoria Clarke told the Reuters news agency: “In terms of the consumer, it certainly means that the squeeze on real spending power remains very much in place but that’s mitigated to an extent by employment having held up relatively well.”
The Bank of England warned last week that inflation might remain above its 2% target for the next two years. It will publish its latest quarterly economic forecasts tomorrow.
An 8.5% rise in alcohol and tobacco prices contributed to inflation staying stubbornly at 2.7%, countering downward pressure from slower price rises in a range of items including clothes and shoes.
The ONS also said house prices rose 3.3% on the year in December – the largest increase since November 2010.
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