UK inflation slowed for the second consecutive month in December after it hit a 41-year peak in October suggesting the price surge has peaked.
The annual rate of consumer price inflation declined to 10.5 per cent in December, from 10.7 per cent in November and further below the 41-year high of 11.1 per cent in October, according to data published on Wednesday by the Office for National Statistics.
The decline was in line with analysts’ expectations.
However, core inflation, which strips out volatile food, energy, alcohol, and tobacco prices remained unchanged at 6.3 per cent, missing the forecast by economists polled by Reuters of a decline to 6.2 per cent.
The ONS said the slowdown in inflation was in part driven by the easing of motor fuel prices.
Grant Fitzner, chief economist at the ONS, said: “Prices at the pump fell notably in December, with the cost of clothing also dropping back slightly.
“However, this was offset by increases for coach and air fares, as well as overnight hotel accommodation. Food costs continue to spike with prices also rising in shops, cafés and restaurants.”
Food price inflation rose to 16.9 per cent in December from 16.5 per cent in November.
Chancellor Jeremy Hunt, said: “High inflation is a nightmare for family budgets, destroys business investment and leads to strike action, so however tough, we need to stick to our plan to bring it down.”
US inflation fell to a 15-month low in December while eurozone price rises dropped back to single figures.
The Bank of England has raised interest rates from 0.1 per cent in November 2021 to the current 3.5 per cent in order to bring inflation down to its 2 per cent target. Markets are pricing in a 50 basis points rate increase at the next meeting on February 2.
The BoE expects inflation to remain above 10 per cent in the first quarter of 2023 before falling sharply from the middle of the year.