Inflation rate dipped to 2.5% in December
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The rate of inflation fell slightly to 2.5% in December, official figures reveal today. That was a slight drop from 2.6% in November and below City forecasts of 2.6%. The dip will ease some pressure on Rachel Reeves after a week of turmoil in the financial markets.
However, it means the Consumer Prices Index - the main measure of inflation - remains above the Bank of England’s target of 2%. The Office for National Statistics (ONS) said a fall in hotel room rates and smaller increases in duty on tobacco were two of the biggest factors behind the easing in the inflation rate.
Food prices rose by 2% unchanged from November. Food inflation peaked at 19.2% in March 2023. The inflation data comes ahead of the latest figures on GDP growth for the month of November, which are published by the ONS tomorrow. These are expected to show that the economy grew by around 0.2%.
Joe Nellis, economic adviser to accountancy firm MHA said: The small drop in year-on-year inflation to 2.5% in December is a welcome dip, but inflation remains an issue dogging the UK economy. “In light of the recent backlash from the financial markets against the UK, it is important to note that alongside international and domestic political uncertainty, as well as a sluggish UK economy, sticky inflation is currently contributing to an increase in UK bond yields - and hence up the cost of government borrowing.
