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LONDON — Inflation in the United Kingdom eased during the month, in line with economists’ expectations, as spending on fuel, clothing and entertainment pulled down the index.
Inflation eased to 10.5% in December, down from 10.7% in November, Britain’s Office for National Statistics said on Wednesday. A panel of economists polled by Reuters forecast Britain’s consumer price index to reach 10.5 percent in December, down from a 41-year peak of 11.1 percent reached in October.
The core consumer price index, which excludes food, energy, alcohol and tobacco, was flat for the month at 6.3% in December, the ONS found.
The agency said the biggest contributors to the decline came from the transportation, apparel and entertainment sectors, offsetting jumps in housing and household services, food and non-alcoholic beverages.
Inflation rates surged in 2022, fueled by spikes in energy prices as Western sanctions nibbled access to Russian oil and gas supplies. Policymakers are tackling rising inflation with a series of interest rate hikes, with British Prime Minister Rishi Sunak on January 4 pledging to halved UK headline inflation to “relieve the cost of living and provide financial security to the people”.
The Bank of England recently raised its key interest rate by 0.5 percentage points to 3.5% on 15 December. Financial markets expect a further increase of up to 4% when it meets to determine its next steps in monetary policy on February 2, according to Reuters.
The UK has been rocked by waves of industrial action since late last year, with teachers, rail staff, civil service professionals and nurses set to strike this month and into early February. The government responded with an proposal for an anti-strikes bill intended to impose “minimum service rules”.
Workers’ pay remains marginal to the rate of inflation, with average UK wages rising by 6.4% year-on-year in September-November 2022. The ONS said on 17 January.
“Although there are some indications that inflation may have peaked, prices will remain high in the coming months,” warned Helen Dickinson, chief executive of the British Retail Consortium.
“Retailers are determined to support their customers during this cost of living crisis. They keep the prices of many basic goods affordable, extend their value ranges, raise the pay of their own staff and offer discounts to vulnerable groups.’
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