UK inflation surges more than expected, says ONSStaff Writer | January 18, 2017
UK inflation surged more than expected to 1.6% by the end of December, the highest level since July 2014.
Business in Britain The highest inflation since July 2014
Month-on-month, CPI rose 0.5% in December from the 0.2% in November, more than the consensus forecast for a 0.3% rise.
ONS said higher air fares and supermarkets passing on rises in the price of food to consumers were the main reasons for the increase in the rate, while petrol prices fell by less than they did a year ago.
Core inflation, which excludes more more volatile prices such as energy, food, alcohol and tobacco, rose to 1.6% from 1.4%, driven by a rebound in inflation in the services sector to 2.5% from 2.2% in November.
The rise in services inflation was broad-based, with accommodation, recreational and insurance sectors all seeing big price increases.
Meanwhile, inflationary pressures at the beginning of the supply chain have continued to build, with prices paid by UK manufacturers for materials and fuels rising 15.8% in the year to December, up from a 13.3% rise in November, while factory gate prices rose 2.7% in the year and 0.1% on the month.
The pound was only slightly improved versus the euro at 1.1395 after the ONS announcement though versus the dollar, having sunk as low as 1.2021 overnight, rebounded more than 1% to 1.2171. ■