According to the report from the Office for National Statistics (ONS), in December consumer prices rose by 4.0% per year after increasing by 3.9% per year in November. It is the first increase in inflation rate in ten months. Economists had expected inflation to slow to 3.8% per annum. The largest upward contribution to CPI annual rates came from alcohol and tobacco (+12.8% per annum compared to +10.2% per annum in November), while the largest downward contribution came from food and non-alcoholic beverages (+8% per annum compared to +9.2% per annum in November).
Meanwhile, core CPI - which excludes energy, food, alcohol and tobacco - rose by 5.1% per annum (the lowest rate since January 2022) after a similar increase in November. Consensus estimates suggested an increase by 4.9% per annum. On a monthly basis, core consumer prices edged up 0.6%, compared with the 0.3% decrease in November and the market estimate of a 0.4% increase.
The data also showed that on a monthly basis, the consumer price index rose by 0.4%, offsetting the November drop (-0.2%). Economists expected an increase of 0.2%.