United Kingdom Inflation

United Kingdom

Inflation moderates further in December

In December, consumer prices increased 0.4% over the previous month, which doubled the 0.2% rise observed in November. The stronger print mainly reflected seasonal increases in the prices for transport, especially air fares, as well as for food and non-alcoholic beverages. Despite the monthly increase, annual headline inflation dropped markedly from 4.8% in November to 4.2% in December. The figure represents the lowest level since June and was in line with market expectations. Despite the moderation, inflation remains high by historical standards, averaging 4.5% in the full year 2011, which represents the highest level since 1991 and more than doubles the Bank of England's target of 2.0%. According to its November Inflation Report, the Bank of England estimates inflation to moderate to 2.6% in 2012.


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