UK inflation rate rises to 4% in December for first time in 10 month

Wednesday's figures showed that core inflation - which excludes volatile food, energy, alcohol and tobacco prices - was 5.1% in December, the same rate as November

Britain's annual rate of consumer price inflation rose for the first time in 10 months in December, increasing to 4 per cent from 3.9 per cent in November which was its lowest in more than two years, official figures unexpectedly showed on Wednesday.

A Reuters poll of economists had pointed to a reading of 3.8 per cent .
 

The data, which follows bigger-than-expected falls in inflation in recent months, is likely to concern the Bank of England which raised interest rates to a 15-year high of 5.25 per cent in August.
 

The central bank forecast in November that it would take until late 2025 to return inflation to its 2 per cent target, but many economists now think this could happen as soon as April or May this year due partly to a slide in wholesale gas prices.
 

 

Surging gas prices following Russia's invasion of Ukraine pushed British inflation to a 41-year high of 11.1 per cent in October 2022, adding significantly to existing inflation pressures from supply chain difficulties following the COVID-19 pandemic.
 

Wednesday's figures showed that core inflation - which excludes volatile food, energy, alcohol and tobacco prices - was 5.1 per cent in December, the same rate as November.
 

Services inflation increased to 6.4 per cent in December from 6.3 per cent in November.
 

The BoE looks at both core CPI and services inflation as a better guide to underlying price pressures in the economy, especially those caused by rapid wage growth.
 

Figures on Tuesday showed average weekly earnings excluding bonuses rose by an annual 6.6 per cent in the three months to the end of November - the slowest increase in nearly a year but roughly double the pace the BoE views as consistent with getting inflation back sustainably to 2 per cent .