LONDON: Britain’s annual rate of consumer price inflation rose for the first time in 10 months in December, increasing to 4% from 3.9% in November which was its lowest in more than two years, official figures unexpectedly showed on Wednesday.
A Reuters poll of economists had pointed to a reading of 3.8%.
The data, which follows bigger-than-expected falls in inflation in recent months, is likely to concern the Bank of England which raised interest rates to a 15-year high of 5.25% in August.
The central bank forecast in November that it would take until late 2025 to return inflation to its 2% target, but many economists now think this could happen as soon as April or May this year due partly to a slide in wholesale gas prices.
Surging gas prices following Russia’s invasion of Ukraine pushed British inflation to a 41-year high of 11.1% in October 2022, adding significantly to existing inflation pressures from supply chain difficulties following the COVID-19 pandemic.
Wednesday’s figures showed that core inflation - which excludes volatile food, energy, alcohol and tobacco prices - was 5.1% in December, the same rate as November.
Services inflation increased to 6.4% in December from 6.3% in November.
The BoE looks at both core CPI and services inflation as a better guide to underlying price pressures in the economy, especially those caused by rapid wage growth.
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Figures on Tuesday showed average weekly earnings excluding bonuses rose by an annual 6.6% in the three months to the end of November - the slowest increase in nearly a year but roughly double the pace the BoE views as consistent with getting inflation back sustainably to 2%.
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