Inflation rate continues to rise

The underlying rate of inflation rose slightly last month following an increase in food prices, new data showed today.

The figure, which excludes mortgage interest payments, edged up by 0.1% to 1.9%, the Office for National Statistics said.

Upward pressure from food prices due to the cold weather in December took the underlying rate above last month's record lows. Despite the rise, the inflation picture remains benign, with the underlying rate still some way short of chancellor Gordon Brown's target of 2.5%.

Today's figure was in line with most City expectations.

Headline inflation, which includes mortgage interest payments, continued to fall - this time to its lowest level since March 1960.

The rate of 0.7% was 0.2% lower than November and reflects the cheaper cost of borrowing following a spate of interest rate cuts by the Bank of England in the last year.

The headline rate fell by a higher than expected 0.7% in November.

Today's data also showed that motoring costs were cheaper in December as increases in some car insurance premiums were less than last year.

Weaker oil prices have already contributed to the benign inflation picture over recent months.

As well as an increase in some seasonal food prices, products such as soft drinks and some meats were also more costly than last year. There were also small upward effects from clothing and footwear, while there was less discounting in the women's fashion sector this year, the ONS said.