Inflation in unexpected fall to 2.5% - what it means for your money
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UK inflation unexpectedly fell slightly to 2.5% in December, latest figures show today. This is down from the 2.6% that was recorded in November - but is still higher than the Bank of England 2% target. Most experts had expected inflation to remain unchanged in December. Inflation had been steadily coming down in recent months and fell to 1.7% last September, its lowest level in three years. It started to rise again in October, after energy bills rose when the Ofgem price cap was updated.
The Office for National Statistics (ONS), which releases inflation data every month, said falling hotel and tobacco prices were the main contributing factors to inflation dipping in December, but said the cost of fuel and second-hand cars had risen. Core inflation - which excludes energy, food, alcohol and tobacco, and is closely watching by the Bank of England - also fell from 3.5% to 3.2%. It comes as Chancellor Rachel Reeves has faced criticism over the last few days after Government borrowing costs soared to their highest level since 2008, while the pound hit a 14-month low against the US dollar.
Rachel Reeves said: “There is still work to be done to help families across the country with the cost of living. That’s why the Government has taken action to protect working people’s payslips from higher taxes, frozen fuel duty and boosted the national minimum wage. In our Plan for Change, we were clear that growth is our number one priority to put more money in the pockets of working people. I will fight every day to deliver that growth and improve living standards in every part of the UK.”.