UK inflation rose to 4% in December
Latest reading serves as a stark reminder that the battle against high inflation is not yet won.
17th January 2024 07:53
by Myron Jobson from interactive investor
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Commenting, Myron Jobson, Senior Personal Finance Analyst at interactive investor, says: “The latest inflation reading suggests that inflation is on a winding road back to normality. The modest month-on-month uptick in CPI doesn’t mean the wheels are coming off but serves as a stark reminder that the battle against high inflation is not yet won. We are still facing a significant erosion of our buying power.
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“The increase in the annual rate of inflation in December is largely the result of the increase in tobacco duty, after the government announced higher taxes in the Autumn Statement. This was partially offset by falling food inflation.
“The important dynamic is really at the core level, stripping out the volatile energy and food components of the CPI. Core inflation remained unchanged in December at 5.1%, which is unlikely to set off alarm bells among Bank of England officials, but could keep them wary. It is a reminder for them to tread carefully and not rush interest rate cuts so as not to unpick the progress made in taming inflation.
“Inflation is still expected to continue to moderate in the coming months. Remember, a fall in inflation doesn’t mean that prices are falling; it means that they are rising less quickly. We are still paying more for goods and services compared with a year before. As such, it remains important to keep on top of your finances and make the necessary adjustments to maintain financial resilience, while keeping long-term financial goals high up the priority list.”
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