UK inflation eases for a 2nd month, falling to 10.5%

LONDON — UK inflation eased for a second month in December, boosting confidence that the cost-of-living crisis has peaked, AP reported.

Consumer prices rose 10.5 per cent in the year through December, down from 10.7 per cent the previous month, the Office for National Statistics said on Wednesday. Inflation peaked at a 41-year high of 11.1 per cent in October.

While the drop is welcome, inflation is still running at levels last seen in the early 1980s. UK prices are also rising faster than in other major industrialised nations. Inflation slowed to 6.5 per cent last month in the US and 9.2 per cent in the 20 countries that use the euro.

Inflation soared after Russia’s attack on Ukraine fueled sharp increases in food and energy prices, eroding savings and living standards. That has triggered a wave of strikes across Britain as nurses, train drivers, border guards and teachers demand pay increases and the government tries to prevent higher wages from triggering a second round of domestically driven inflation that could be more difficult to reverse.

“High inflation is a nightmare for family budgets, destroys business investment and leads to strike action, so however tough, we need to stick to our plan to bring it down,″ UK Treasury chief Jeremy Hunt said. “While any fall in inflation is welcome, we have a plan to go further and halve inflation this year, reduce debt and grow the economy — but it is vital that we take the difficult decisions needed and see the plan through.″

The inflation rate fell in December as the price of motor vehicle fuels rose more slowly than in previous months. The cost of gasoline and diesel increased 11.5 per cent in the 12 months through December, down from 17.2 per cent the previous month.

But that gave little relief to beleaguered British consumers, who saw food price inflation accelerate for a 17th consecutive month. Food costs soared 16.9 per cent in December, compared with 16.5 per cent in November.

The price of eating out also rose, with costs for visiting a restaurant or hotel jumping 11.4 per cent in December, up from 10.2 per cent in November.

Inflation is expected to slow in the coming months as last year’s surge in energy prices begins to drop out of the annual inflation figures.

Consumers are also being helped by a mild winter in Europe, which has reduced demand for heating oil and natural gas and cut prices. Wholesale natural gas prices, which soared tenfold during the first six months of the war in Ukraine, have fallen more than 60 per cent from their August peak.