Inflation hits highest level for almost a year

Britain’s consumer price inflation rate rose to 0.2 percent in the year ending in December, up from 0.1 percent in the year ending in November.

The ONS said transport costs, mainly air fares and petrol, were the main contributors to the rise, but this was partially offset by falls in alcohol, tobacco and food costs.

The agency said that the increase in the headline index was driven by higher prices within key divisions which contribute to the index, particularly imported food items and drinks, as well as clothing and footwear and transportation as a result of intermittent PMS supply shortages.

Africa’s biggest oil producer has been hit hard by the global slump in crude prices which has sent its currency, the naira, sliding to record lows on the parallel market.

But house price inflation, which is not in the CPI index, continues to run far ahead of general inflation.

UK inflation finding it had to unstick itself from zero UK CPI 12 month inflation in December 2015 lifted itself very slightly to 0.2 percent compared to 0.1 percent in November.

Over the year to November house price annual inflation was 8.3 per cent in England, 1.3 per cent in Wales, 0.4 per cent in Scotland and 4.6 per cent in Northern Ireland.

This has taken pressure off the Bank of England – which is committed to keep inflation around 2% in the medium term – and allowed officials ample leeway to leave interest rates pegged at a record-low 0.5%.

A slump in world oil prices has helped inflation bump along at zero for almost a year – well below the Bank of England’s 2% target.

A new report says UK’s consumer price inflationrose in the a year ago.

Sterling, which has fallen steeply in recent weeks against the euro and the dollar as expectations of rate rise have receded, rebounded following the release of the data. Month-on-month, it slid 0.8 percent after easing 1.6 percent. Core inflation, which excludes volatile food and energy prices, accelerated to 1.4 per cent, the highest in a year, the figures from the Office for National Statistics show.

Manufacturers have benefitted hugely from the fall in commodity prices, with the overall cost of ‘input’s down 10.8% in the year to December 2015.

It added that the food sub-index increased to 10.6 per cent (year-on-year) during the month, 0.3 per cent points from rates recorded in November.

‘If the cost of oil continues to drive down prices at the pumps and supermarkets continue their fight for market share with cheaper food, we can expect inflation to be hovering at this level for a while longer.