The UK inflation rate rose to a 30-year high in December attributable to higher energy costs, resurgent demand, and supply chain constraints that drove up consumer prices.
Source: Office for National Statistics
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Inflation rose to an annual 5.4%, its highest level since March 1992, and higher from 5.1% posted in November.
The Consumer Prices Index, including owner occupiers’ housing costs (CPIH), increased by 4.8% in the 12 months to December and 4.6% higher than November.
Housing and household services and the transport was the largest contributor to the surging consumer prices.
On a monthly basis, consumer prices increased 0.5%, surpassing economist estimates for a 0.3% jump.
The increasing cost of living is raising expectations that the Bank of England is planning to increase interest rates again. In December, the BoE started increasing its borrowing costs from their pandemic-record lows.
The Bank is working against the backdrop of tight labor markets, with vacancies remaining at a record level below its pre-pandemic level.