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United Kingdom Inflation December 2021

United Kingdom: Inflation comes in at highest level since March 1992 in December

Consumer prices increased 0.50% over the previous month in December, slowing down from the 0.74% increase seen in November. December’s result marked the weakest reading since September. The moderation was broad-based, with reduced price pressures recorded for recreation and culture, transportation, and housing and utilities.

Inflation edged up to 5.4% in December, following November’s 5.1%, representing the highest inflation rate since March 1992 and coming in above market expectations. A combination of Brexit-related and international supply-side pressures and high energy prices have spurred inflation in recent months. Meanwhile, the trend pointed up, with annual average inflation coming in at 2.6% in December (November: 2.2%). Finally, core inflation ticked up to 4.2% in December, from the previous month’s 4.0%.

Together with recent solid labor market data, the December inflation reading tilts the balance of risks towards a faster pace of rate hikes by the Bank of England—with the next increase potentially as soon as the next meeting in February.

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