UK Inflation Rate at 11-Month High

Consumer prices in the United Kingdom edged up 0.2 percent year-on-year in December of 2015, the highest figure since January and in line with market expectations while core inflation accelerated for the third straight month to 1.4 percent. However, inflation for 2015 was 0 percent for the first time since records began in 1950, well below the Bank of England's 2 percent target.

Year-on-year, the biggest upward pressure came from prices of housing and utilities (up 0.3 percent for the second consecutive month), followed by restaurants and hotels (up 1.7 percent following a 1.8 percent rise in the previous month) and miscellaneous goods and services (up 1.1 percent compared to a 1.3 percent rise in the previous month). In contrast, the highest downward pressure came from cost of recreation and culture (-0.3 percent from -0.1 percent in November), food and non-alcoholic beverages (-2.9 percent from -2.4 percent in the previous month), clothing and footwear (-0.3 percent after 0 percent in the previous month) and transport (-0.2 percent from -2.1 percent in the previous month).

On a monthly basis, consumer prices increased 0.1 percent after being flat in the previous month. The only substantial upward contribution came from transport: prices increased by 1.8 percent, mainly due to air fares (up 46 percent) and to a lesser extent motor fuels (petrol prices fell by 3.4 pence per litre while diesel fell by 2.3 pence). The largest downward contribution came from food and non-alcoholic beverages: prices fell by 0.2 percent, mainly cauliflower and potato crisps and alcoholic beverages and tobacco: prices went down 1.3 percent, mainly wine and spirits.

Annual core inflation rate which strips out increases in energy, food, alcohol and tobacco accelerated to 1.4 percent from 1.2 percent in November. 

UK Inflation Rate at 11-Month High

ONS | Joana Taborda |
1/19/2016 11:03:18 AM