"Given the resilience of UK data so far, today’s figures may provoke debate amongst Monetary Policy Committee members around the timing of the next rate rise."
The Consumer Prices Index rose by 1.8% in the year to January 2017, up from 1.6% in the year to December 2016, according to the latest ONS statistics.
The rate in January 2017 was the highest since June 2014 and was fuelled by rising prices for motor fuels and to a lesser extent food prices.
CPIH, which the ONS will adopt as its preferred measure of inflation in March, rose by 2.0% in the year to January 2017, compared with a 1.7% rise in the year to December 2016.
In December, the MPC said it expects inflation to rise to its 2% target within six months - quicker than expected.
Industry experts now believe that racing inflation figures will put pressure on the Bank of England to raise rates sooner.
Nancy Curtin, Chief Investment Officer at Close Brothers Asset Management, commented: “With inflation coming in at a two year peak, higher living costs are set to hit consumers’ wallets, particularly given the fact wage growth just isn’t keeping up. However, given the resilience of UK data so far, today’s figures may provoke debate amongst Monetary Policy Committee members around the timing of the next rate rise.
“Political uncertainty still looms large in both the UK and the US, which is keeping yields low and investor caution high. Despite the tumbling pound acting as a shock absorber for the economy in the wake of the Brexit vote, and strong industrial output and export figures, the MPC may hold fast until after Article 50 is triggered and business intentions are known.”