December inflation set to stay at 2.6% in ‘reprieve’ for UK economy
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UK inflation is set to have stayed the same in December as economists anticipate a “temporary reprieve” before price rises pick up pace this year. The rate of Consumer Prices Index (CPI) inflation is expected to have come in at 2.6% last month, unchanged from November, according to a consensus of analysts provided by Pantheon Macroeconomics.
The Office for National Statistics will publish the latest figures on Wednesday. Price rises on airfares, hotels, alcohol and tobacco are set to have weakened, putting downward pressure on the overall rate of inflation. On the other hand, analysts think energy prices continued to rise, while food inflation is likely to have increased in December.
Increases to the National Living Wage and employer national insurance contributions will, we expect, push inflation higher over 2025. Rob Wood and Elliott Jordan-Doak, economists for Pantheon Macroeconomics, said inflation staying at 2.6% would be “only a temporary reprieve” for the economy.
This is because they are expecting price pressures to build from 2025 with CPI inflation forecast to reach 3.2% in April. Sanjay Raja, a senior economist for Deutsche Bank, agreed that weaker airfares and hotel prices will have helped put downward pressure on inflation in December, which it forecasts will come in at a slightly higher 2.7%.
