The UK inflation rate falls for the second month in a row to 10.5%

The UK inflation rate falls for the second month in a row to 10.5%

MichelleMitha | iStock/360 | fake images

LONDON – UK inflation eased for the month, in line with economists’ expectations, as fuel, clothing and recreation costs dragged the index lower.

Inflation eased to 10.5% in December, down from 10.7% in November, Britain’s Office for National Statistics said on Wednesday. A panel of economists polled by Reuters had projected Britain’s consumer price index to hit 10.5% in December, down from a 41-year high of 11.1% hit in October.

The core CPI, which excludes food, energy, alcohol and tobacco, held steady for the month at 6.3% in December, the ONS found.

The agency said the largest contribution to the decline came from the transportation, clothing and recreation sectors, offsetting increases in housing and domestic services, food and non-alcoholic beverages.

Inflation rates have soared throughout 2022, fueled by increases in energy prices as Western sanctions affect access to Russian oil and gas supplies. Policymakers have been combating rising inflation with a series of interest rate hikes, with British Prime Minister Rishi Sunak pledging on January 4 to halve UK headline inflation to “alleviate the cost of living and provide financial security for people.”

The Bank of England recently raised its main interest rate by 0.5 percentage point to 3.5% on December 15. Financial markets anticipate a further increase to 4% when they meet to determine the next monetary policy steps on February 2, according to Reuters.

The UK has been rocked by waves of strike action since late last year, with teachers, train transport staff, civil service professionals and nurses striking this month and early February. The government has responded with a proposed anti-strike law that seeks to impose “minimum service regulations.”

Workers’ pay continues to be dwarfed by the pace of inflation, with average UK wages registering a 6.4% year-on-year increase over the period from September to November 2022, the ONS said on January 17.

UK is fiscally unstable, says Enquest CEO

“While there are signs that inflation may have peaked, prices will remain high for months to come,” warned Helen Dickinson, chief executive of the British Retail Consortium.

“Retailers are determined to support their customers during this cost-of-living crisis. They are keeping the price of many essential items affordable, expanding their value ranges, increasing the pay of their own staff, and offering discounts for vulnerable groups.”

Leave a Comment

Your email address will not be published. Required fields are marked *