UK inflation cools slightly more than expected in December

(Alliance News) - Inflation in the UK cooled slightly in December, the latest figures from the Office for National Statistics showed on Wednesday.

In December, the consumer price index rose annually by 10.5%, compared to a 10.7% rise in November. Consensus had expected 10.6% inflation last month, according to FXStreet.

The print is down a from a four-decade high of 11.1% in October.

On a monthly basis, CPI rose by 0.4% in December, the same pace as in November and in line with market expectations.

The consumer price index, including owner occupiers' housing costs, rose by 9.2% in December, slowing from 9.3% in November.

The ONS said the largest downward contribution to the change in both CPI and CPIH annual inflation rates between November and December were transport, clothing and footwear, and recreation and culture.

Earlier this month, the Bank of England's chief economist said that a "distinctive context" within the UK creates the potential for inflation to prove "persistent."

In December, the Bank of England raised UK interest rates by 50 basis point to 3.5% in an attempt to return inflation to its 2% target.

In February, the Bank of England will meet again. Currently, markets expect another 50 basis point rise in rates.

By Heather Rydings, Alliance News senior economics reporter

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