The government has admitted households are feeling the pain from rising inflation after the cost of living rose to a near six-year high of 3.1% in November.

Amid fears that the intensifying pressure on living standards will hit high street spending in the runup to Christmas, the financial secretary to the Treasury, Mel Stride, said 2018 would bring better news.

Q&A What is inflation and why does it matter? Show Inflation is when prices rise. Deflation is the opposite – price decreases over time – but inflation is far more common. If inflation is 10%, then a £50 pair of shoes will cost £55 in a year's time and £60.50 a year after that. Inflation eats away at the value of wages and savings – if you earn 10% on your savings but inflation is 10%, the real rate of interest on your pot is actually 0%. A relatively new phenomenon, inflation has become a real worry for governments since the 1960s. As a rule of thumb, times of high inflation are good for borrowers and bad for investors. Mortgages are a good example of how borrowing can be advantageous – annual inflation of 10% over seven years halves the real value of a mortgage. On the other hand, pensioners, who depend on a fixed income, watch the value of their assets erode. The government's preferred measure of inflation, and the one the Bank of England takes into account when setting interest rates, is the consumer price index (CPI). The retail prices index (RPI) is often used in wage negotiations.

Stride said: “Inflation is expected to fall over the coming year, but I recognise families are feeling a squeeze now. We are determined to help, which is why the autumn budget cut income tax, boosted basic pay by more than inflation and froze alcohol and fuel duties.”

Figures from the Office for National Statistics (ONS) showed dearer computer games and a smaller November fall in airfares than a year ago were the main factors behind a rise in the consumer price index measure of inflation from 3% in October.

The annual inflation rate has more than doubled from 1.2% to 3.1% in the past year – its highest level since March 2012 – largely as a result of the fall in the value of the pound following the EU referendum in June 2016.

Under the terms of its independence, the Bank of England is obliged to keep inflation within one percentage point of the government’s 2% target, so November’s increase will force its governor, Mark Carney, to write an explanatory letter to the chancellor, Philip Hammond.

Carney will blame the overshoot on the depreciation in sterling and will add that inflation will come back towards its target during 2018 as the impact of the weaker pound fades.

Adam Corlett, senior economic analyst at the Resolution Foundation, said: “As we approach the end of the year, rising inflation will deepen the current squeeze on pay. For low-income families it also further erodes the value of working age benefits – which remain frozen at their 2015 levels.

“This double hit means many families will be feeling the pinch in the runup to Christmas. While inflationary pressures are expected to ease next year, far stronger wage growth will be needed to get Britain’s pay recovery back on track.”

Frances O’Grady, the TUC general secretary, said: “Christmas dinner is going to be a lot more expensive this year. Food prices have gone up at twice the rate of wages.

“The government is failing to deal with Britain’s cost of living crisis. Working people need a pay rise. They shouldn’t have to worry about putting the turkey on the table.”

A breakdown of the ONS data showed food prices up by 4.1% on a year ago, with transport costs rising by 4.5% and clothing and footwear up by 3%.

City analysts believe inflation is close to a peak but evidence that there may be more inflationary pressure in the pipeline emerged from separate ONS figures for producer prices, which measure the cost of the fuel and raw materials used by industry and the price of goods leaving factory gates.

In November, fuel and raw material bills for manufacturers were 7.3% higher than a year ago, up from 4.8% in October, while factory gate prices rose by 3%, up from 2.8% in October.

Mike Prestwood, the ONS head of inflation, said: “CPI inflation edged above 3% for the first time in nearly six years, with the price of computer games rising and airfares falling more slowly than this time last year. These upward pressures were partly offset by falling costs of computer equipment.

“The prices of raw materials and goods leaving factories continued to increase as oil and petrol prices continued to rise. Annual rises in house prices and rents continued to slow, with London seeing house price falls for the second month running.”

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