Current:Home > MyBritain’s unexpected inflation increase in December is unlikely to worry the Bank of England-VaTradeCoin
Britain’s unexpected inflation increase in December is unlikely to worry the Bank of England
lotradecoin integration View Date:2024-12-25 23:18:52
LONDON (AP) — Inflation across the United Kingdom increased unexpectedly last month as a result of sharp hikes in tobacco and alcohol prices, according to official figures released Wednesday.
Economists said it was unlikely to prompt concern at the Bank of England, which recently ended nearly two years of interest rate increases.
The Office for National Statistics said inflation, as measured by the consumer prices index, was 4% in December, up from 3.9% the month before, the first increase in 10 months.
Most economists had expected the rate to edge lower to 3.8%.
Despite the increase, inflation remains sharply lower at the end of 2023 than at the start of last year, when it stood above 10%.
The increase is unlikely to cause too much concern among rate-setters at the Bank of England as inflation is below where it expected it to be.
“This serves as reminder that bumps in the lower inflation road are inevitable, but does not change the big picture that price rises are coming in much lower than the Bank of England expected as recently as November,” said Lalitha Try, economist at the Resolution Foundation.
After the Bank of England in August left its main interest rate unchanged at a 15-year high of 5.25%, speculation mounted it could soon start cutting borrowing rates in light of recent sharp falls in inflation.
The Bank of England has managed to get inflation down from a four-decade high of more than 11%, but there’s still a way to go to get to its target of 2%. But with food and energy prices trending lower, there are hopes it could meet the target this year, and start reducing interest rates.
Higher interest rates targeted a surge in inflation, first stoked by supply chain issues during the coronavirus pandemic and then Russia’s full-scale invasion of Ukraine, which pushed up food and energy costs.
While the interest rate increases have helped in the battle against inflation, the squeeze on consumer spending, primarily through higher mortgage rates, has weighed on the British economy, which is barely growing.
Whatever happens on the interest rate front in the coming months, it’s very likely that relatively high borrowing rates and low economic growth will be the backdrop for the general election, which has to take place within a year. That’s also a concern for the governing Conservative Party, which opinion polls say is way behind the main opposition Labour Party ahead of the vote.
veryGood! (9629)
Related
- Trump will be honored as Time’s Person of the Year and ring the New York Stock Exchange bell
- Hannah Montana's Emily Osment Is Engaged to Jack Anthony: See Her Ring
- CNN Producer David Bohrman Dead at 69
- Tourists flock to Death Valley to experience near-record heat wave
- Morgan Wallen sentenced after pleading guilty in Nashville chair
- The Fed already had a tough inflation fight. Now, it must deal with banks collapsing
- Alix Earle and NFL Player Braxton Berrios Spotted Together at Music Festival
- Very few architects are Black. This woman is pushing to change that
- Luigi Mangione's Lawyer Speaks Out in UnitedHealthcare CEO Murder Case
- A Clean Energy Milestone: Renewables Pulled Ahead of Coal in 2020
Ranking
- Secretly recorded videos are backbone of corruption trial for longest
- A Big Climate Warning from One of the Gulf of Maine’s Smallest Marine Creatures
- Former Wisconsin prosecutor sentenced for secretly recording sexual encounters
- New drugs. Cheaper drugs. Why not both?
- Our 12 favorites moments of 2024
- In Baltimore, Helping Congregations Prepare for a Stormier Future
- China has reappointed its central bank governor, when many had expected a change
- Dangerous Air: As California Burns, America Breathes Toxic Smoke
Recommendation
-
Biden commutes roughly 1,500 sentences and pardons 39 people in biggest single
-
Man gets 12 years in prison for a shooting at a Texas school that injured 3 when he was a student
-
Inside the emerald mines that make Colombia a global giant of the green gem
-
Jon Hamm Marries Mad Men Costar Anna Osceola in California Wedding
-
See Mariah Carey and Nick Cannon's Twins Monroe and Moroccan Gift Her Flowers Onstage
-
China Provided Abundant Snow for the Winter Olympics, but at What Cost to the Environment?
-
Despite One Big Dissent, Minnesota Utilities Approve of Coal Plant Sale. But Obstacles Remain
-
Video: Carolina Tribe Fighting Big Poultry Joined Activists Pushing Administration to Act on Climate and Justice