Inflation rises to 4% in January

The UK Consumer Prices Index (CPI) annual inflation rate rose to 2 year high of 4% in January, up from 3.7% in December; as the VAT rise left its mark.

Increased oil prices also meant inflation stayed considerably higher than the target of 2%.

Retail Prices Index (RPI) inflation which accounts for mortgage interest payments - rose to 5.1% from 4.8%.

The CPI figures will put pressure on the Bank of England to lift interest rates to curb accelerating inflation with the pound very firm at the moment as markets price in three possible interest rises this year.