London: The UK’s inflation slowed for a second month in December 2022, but the cost-of-living crisis continued as food inflation remained record high, official figures showed.
The consumer price index rose at an annual rate of 10.5 per cent in December, falling from 10.7 per cent in November and a 41-year peak of 11.1 per cent in October, the Office for National Statistics (ONS) said on Wednesday.
“Prices at the pump fell notably in December, with the cost of clothing also dropping slightly,” ONS Chief Economist Grant Fitzner said.
“However, this was offset by increases for coach and air fares as well as overnight hotel accommodation. Food costs continue to spike, with prices also rising in shops, cafes and restaurants,” he added.
The annual inflation rate for transport was 6.9 per cent in December, down for a sixth consecutive month, and the main driver behind the easing came from motor fuels, the ONS said.
Food and non-alcoholic beverage prices continued to rise, up by 16.9 per cent in the 12 months to December, the highest rate since 1977. The annual rate of inflation for this category has risen for 17 consecutive months, Xinhua news agency reported.
“These figures add to a growing body of evidence that the UK has passed peak inflation. Over the coming year, inflation should fall further towards single digits,” Alpesh Paleja, lead economist of the Confederation of British Industry (CBI), said.
But the cost-of-living crisis will continue to be a very real problem for both households and businesses, as price pressures remain high in the short term, Paleja added.
“Inflation remains particularly high for low-income families, who are on the wrong side of a large cost-of-living gap due to the high cost of energy and food,” said Jack Leslie, senior economist at the think-tank Resolution Foundation.
An analysis conducted by the Resolution Foundation showed that the poorest tenth of UK families experienced an inflation rate of 11.9 per cent compared to only 9.2 per cent for the richest tenth.
The falling inflation rate will also come as a relief to the Bank of England, whose policymakers may see this as an opportunity to slow the pace of further interest rate rises, Yael Selfin, chief economist at KPMG UK, said.
“With the effects of past rate rises still passing through the UK economy, we could see the base interest rate peak at 4 per cent in the first quarter of the year,” he added.