Surprise inflation dip provides ‘respite’ for Chancellor amid market turmoil
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UK inflation unexpectedly fell last month, official figures show, providing “timely respite” for Chancellor Rachel Reeves amid concerns over turmoil in the financial markets. The rate of Consumer Prices Index inflation fell to 2.5% in December from 2.6% in November, the Office for National Statistics said on Wednesday.
Most analysts had been expecting the inflation rate to remain unchanged at 2.6% last month. December’s headline figure nevertheless remains above the Bank of England’s 2% target level, which has raised concern for economists and policymakers amid stagnant economic growth.
Fears over so-called stagflation – where inflation is high but economic growth is low – have helped fuel a period of volatility in the financial markets over the past week. This has seen the value of the pound drop sharply and the cost of borrowing rise to decades-high levels, indicating weaker confidence in the economy.
There is still work to be done to help families across the country with the cost of living. I will fight every day to deliver that growth and improve living standards in every part of the UK. Chancellor Ms Reeves responded to the latest figures by saying she will “fight every day” to improve people’s living standards.
“There is still work to be done to help families across the country with the cost of living,” she said. “I will fight every day to deliver that growth and improve living standards in every part of the UK.”. Former Bank of England policymaker Michael Saunders said Downing Street will be breathing a “sigh of relief” after the surprise dip in December inflation.
