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U.K. CPI sticks at 10.5% in December as shoppers keep spending

Published 18/01/2023, 06:31 pm
Updated 18/01/2023, 06:31 pm
© Reuters.

© Reuters.

By Geoffrey Smith

Investing.com -- U.K. inflation stayed stuck at over 10% in December amid signs that consumers kept spending over the Christmas period despite an intensifying cost-of-living squeeze.

The Office for National Statistics said the consumer price index rose 0.4% on the month, bringing the year-on-year inflation rate down to 10.5% from 10.7%, in line with economists' expectations.

However, there were signs that the numbers were flattered by a drop in fuel prices, and that underlying inflation pressures remained strong. The core CPI, which excludes fuel and food prices, accelerated on the month, rising 0.5% after a 0.3% gain in November. That meant that annual core inflation stayed put at 6.3%, or more than three times the Bank of England's 2% target.

The numbers come after a string of reports from the U.K.'s supermarkets showing chunky rises in sales over the key Christmas period, with grocery sales in particular up over 12% from a year earlier.

Combined with stronger-than-expected labor market data on Tuesday, which showed wages rising at their fastest pace in the last 20 years (excluding the pandemic), the figures make it harder for the Bank of England to slow the pace of its interest rate increases as many have expected.

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