UK inflation fell for the second month in a row, reaching 10.5%

LONDON – UK inflation eased during the month, in line with economists’ expectations, as fuel, clothing and leisure costs pulled the index lower.

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

The Office for National Statistics found that the core consumer price index, which excludes food, energy, alcohol and tobacco, was flat for the month at 6.3% in December.

The agency said the largest declines came from the transportation, apparel and leisure sectors, offsetting increases in housing, domestic services and food and non-alcoholic beverages.

Inflation rates rose during 2022, driven by higher energy prices with the impact of Western sanctions on access to Russian oil and gas supplies. Policymakers have been battling soaring inflation with a series of interest rate hikes, as British Prime Minister Rishi Sunak pledged on January 4. Cut the UK’s headline inflation rate in half “To ease the cost of living and give people financial security.”

The Bank of England recently raised its main interest rate by 0.5 percentage point to 3.5% on December 15th. Financial markets expect a further rise to 4% when it meets to determine its next monetary policy steps on February 2, according to Reuters. .

The UK has been hit by waves of industrial strikes since the end of last year, with teachers, train transport staff, civil servants and nurses set to strike this month and in early February. The government responded with Suggestion of anti-strike law Aimed at delegating the Minimum Service Regulations.

Workers’ wages continue to be dented by the pace of inflation, with average wages in the UK recording an increase of 6.4% year-on-year during the September-November 2022 period, the Office for National Statistics said on Jan. 17.

“While there are some indications that inflation has peaked, prices will remain elevated in the months ahead,” warned Helen Dickinson, chief executive of the British Retail Confederation.

“Retailers are determined to support their customers during this cost-of-living crisis. They are keeping the prices of many essentials affordable, expanding their value ranges, raising the salaries of their employees, and offering discounts to the vulnerable.”