Inflation in the UK was 10.5% in December, the latest data from the Office for National Statistics (ONS) reveals.
December’s figure is slightly down from the 10.7% reported in November and represents the second consecutive monthly fall.
The largest downward contribution of the latest figure came from transport, clothing and footwear, and recreation and culture, with rising prices in restaurants and hotels, and food and non-alcoholic beverages making the largest partially offsetting upward contributions.
Last month, the Bank of England hiked the base rate by 50 basis points to 3.5% from 3%, marking the ninth increase in 2022.
The next Monetary Policy Committee (MPC) meeting is scheduled for 2 February.
Loan.co.uk chief executive Paul McGerrigan says: “The rate of inflation has dipped for the second month in succession, bringing some relief and an increased hope that steps taken by government and the Bank of England are starting to take effect.”
“Number one in Rishi Sunak’s five key priorities is to halve inflation in 2023, so we expect a laser focus on this goal to be driving future decisions.”
“Inflation has caused a real terms decline in wages by 2.6% in the three months to November 2022, among the largest falls since comparable records began in 2001.”
“Even with positive signs inflation is starting to drop – fuelled by lower energy costs and lower prices at the pumps – the bank’s Monetary Policy Committee has a critical decision to make on February 2, and it seems highly likely we’ll see a further increase in interest rates of 0.5%.”
“This will hit households without a fixed mortgage and with high levels of unsecured debt even harder as costs rise. Are they going too hard too fast or is it a necessary measure to ensure inflation drops? One thing is for sure, now is the time for advisory firms to be agile, proactive and innovative with solutions to alleviate the challenges faced by borrowers.”
Mather & Murray managing director Samuel Mather-Holgate comments: “Inflation has likely peaked but won’t fall off substantially until May when the majority of the energy price hikes fall out of the annual figures. This doesn’t mean that prices have dropped, just that they’ve stayed high and not risen higher still.”
“This will kill off many businesses that simply can’t pass on the mounting costs to consumers. Business energy bills are a huge problem and could sadly send many businesses to the wall.”
Interactive Investor senior personal finance analyst Myron Jobson adds: “The second consecutive monthly fall in inflation will raise hopes that peak inflation is behind us, but there is still a long way to go before inflation reverts to normal levels. For now, the ‘new normal’ of high inflation and rising interest rates threaten to squeeze household finances further.”
