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Inflation has unexpectedly surged to a near six year high, forcing the Bank of England to explain to the Chancellor why the cost of living has increased.

Figures released this morning show the Consumer Prices Index (CPI) rose to 3.1% in November, up from 3% in October and its highest level since March 2012.

It means Bank of England Governor Mark Carney must write a letter to Philip Hammond explaining the reasons behind the rapid rise in prices.

The Government has set a CPI target of 2%, with protocol dictating that the Bank must contact Mr Hammond if inflation exceeds 3% or falls short of 1%.

The move will pose fresh questions to the Bank's interest rate-setting Monetary Policy Committee (MPC) about whether or not inflation has peaked.

(Image: AFP)

The MPC is gearing up to announce its latest decision on interest rates this Thursday after hiking the cost of borrowing to 0.5% last month.

Sterling was up nearly 0.3% versus the US dollar at 1.337 following the announcement, and was higher by around 0.2% against the euro at 1.135.

Mike Prestwood, head of inflation at the Office for National Statistics, said: "CPI inflation edged above 3% for the first time in nearly six years with the price of computer games rising and air fares falling more slowly than this time last year.

"These upward pressures were partly offset by falling costs of computer equipment."

The lion's share of the upward pressure came from air fares, which recorded a smaller drop between October and November at 10.4%, compared with a 13.4% fall over the period last year.

Computer games prices were also boosting everyday costs, as games, toys and hobbies lifted 3.7% on an annual basis in November.

On the month, prices climbed by 2.2%, compared with 0.7% growth last year.

(Image: Getty) (Image: PA)

Food and non-alcoholic drinks prices pushed higher, picking up by 0.6% month on month in contrast to a 0.5% lift for the period in 2016.

Part of the rise was pinned on chocolate prices, with sugar, jam, honey, syrups, chocolate and confectionery up 1.5% on the month after falling by 1.5% for the same period last year.

Motorists were also facing higher fuel costs in November, with petrol up by 1.8p per litre month on month to 119.1p, and diesel rising by 2.3p a litre to 122.8p.

It comes after crude oil surged by 7.6% between October and November, reaching its highest level since December 2016.

The Retail Prices Index (RPI), a separate measure of inflation, was 3.9% last month, down from 4% the month before.

The Consumer Prices Index including owner-occupiers' housing costs (CPIH) - the ONS' preferred measure of inflation - was 2.8% in November, unchanged from October.

Lucy O'Carroll, Aberdeen Standard Investments chief economist, said: "It's quite possible that inflation is now close to its peak.

"But some of the latest surveys suggest that service sector costs and prices are rising. Given how dominant services are in the economy, this could feed through to inflation overall.

"That means that further interest rate rises are definitely not off the table.

"The Bank of England has a tricky tightrope to walk. Too much inflation could threaten the Bank's credibility and therefore its grip on the economy."