Britain faced the threat of spiralling pay demands after retail price inflation jumped to a 15-year high of 4.4 per cent on Tuesday.

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Chris Giles on the implications of the climb in UK retail prices

Private and public sector union leaders pledged to defend their members’ living standards, after the retail price index, on which most pay negotiations are based, increased 4.4 per cent in December on the back of higher furniture prices and petrol prices – the highest annual inflation rate since 1991.