UK inflation slows in December but remains sky-high

LONDON: UK annual inflation slowed to 10.5 percent in December, official data showed Wednesday, but remained close to historically high levels.

The Consumer Prices Index (CPI) rate compared with 10.7 percent in November, the Office for National Statistics said in statement.

“Inflation eased slightly in December, although still at a very high level, with overall prices rising strongly during the last year as a whole,” said ONS chief economist Grant Fitzner.

He noted that petrol prices “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,” Fitzner added.

UK inflation began soaring last year amid sharp price rises worldwide on supply constraints caused by Russia’s invasion of Ukraine and the lifting of Covid pandemic lockdowns.

Britain was additionally hit by Brexit fallout. The nation’s CPI reached 11.1 percent in October, the highest level since 1980.

Official data Tuesday revealed that average British wages sank 2.6 percent at the end of last year as pay rises failed to keep pace with inflation, triggering major strike action.

While some striking workers have managed to agree new pay deals, tens of thousands of workers across the private and public sectors are preparing for further stoppages.

Britain’s largest teaching and nursing unions are set to join railway workers in walking out in the coming weeks.

It comes as the Conservative government seeks to limit strikes with controversial legislation, arguing that lifting pay can hinder efforts to cool inflation.

Welcoming December’s dip to inflation, finance minister Jeremy Hunt said in a statement that it was “vital” the government took “the difficult decisions needed” to reduce prices further.

The main policy used to cool inflation is the raising of interest rates by central banks.

The Bank of England and its peers are forecast to keep increasing borrowing costs this year but by less than the aggressive amounts seen in 2022.