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Note: This report summary is one or two months behind the current month as standard reporting practice. The content is indicative only and incomplete with certain data undisclosed. Subscribe to access this data or take out a free 30 day subscription trial now.
CPI rose by 00% YoY, from 5.1% last month – the sharpest rise since March 1992 when it jumped 00%. This was above economists’ expectations of a 5.2% rise.
Notably, the gap between headline inflation and the Bank of England’s 2.0% inflation target is the widest it has ever been.
The surge in CPI was driven by sharp rises in food, clothing and furniture inflation. This was partially offset by some stability in petrol prices in December.
Food & Non-alcoholic Beverages made the largest upward contribution to the change in the CPI rate. Annual inflation surged to its highest rate since 00 00, predominately driven by the food component. The price of some essentials are surging, particularly in the Milk, Cheese & Eggs, Fruit, Vegetables and Oils and Fats components. Consumers are likely to trade down to cheaper alternatives as the cost of their weekly shop grows, although anecdotal commentary suggests this is yet to happen.
Clothing and Footwear also provided upward pressure with prices rising this year compared with a smaller rise a year ago. This is against ‘typical’ trends with prices usually falling at the end of the year due to increased discounting. Women’s and Children’s clothing were the main drivers along with Children’s footwear.
Furniture and maintenance related to home improvements continued to record sharp price increases in December, driven by supply chain constraints and rising demand as consumers increased focus on improving their homes. Inflation within the Household Furniture component surged 00% while Materials for Home Improvement & Repair accelerated by 00% 00.
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Improved outlook for sterling
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