Inflation set for sharp rise after December rebound

Inflation set for sharp rise after December rebound

The UK released December inflation data earlier in the day, which were slightly better than anticipated.

"So if inflation is low and supported and is expected to stay low, it might have a bearing on the Reserve Bank decision".

"The inflation based on CPI-AL and RL has dipped to 3.25 per cent and 3.34 per cent which is driven by lower food inflation mainly on account of decline in prices of pulses, onion, potato, cauliflower, brinjal etc", Labour Minister Santosh Gangwar said in the statement.

Economists had forecast output prices to fall 0.6 percent on year but to rise 0.2 percent on month in December.

Meanwhile, transport prices lifted as some travel restrictions eased earlier in December and air fares rose month-on-month despite the pandemic curbing most worldwide travel.

Statisticians said it was normal for transport costs such as the price of flights to rise at this time of year, but that the rise was bigger than usual.

The ONS added that clothing prices rose "fractionally" in December, a month in which they usually tend to fall because of sales.

Soaring demand for computer games and consoles and children's toys also pushed up inflation, the ONS said.

Food and non-alcoholic drinks were the main things that were cheaper last month, particularly vegetables, the ONS said.

Consumer prices rose 0.6% on the year in December, compared with a 0.3% rise in November.

"Transport costs, including air, sea and coach fares, as well as petrol prices, rose as some travel restrictions eased during parts of the month".

The data also showed that petrol prices rose 1.5p over the month to 114.1p a litre, as the oil price continued to climb.

UK Equity fund manager at Premier Miton Investors Jon Hudson said that at 0.8%, the CPIH 12-month rate "remains well below" the Bank of England's 2% target "but given the lockdowns it is unsurprising".

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