UK Inflation Rises to 8-month High in December


United Kingdom's Consumer Price Inflation (CPI) rose to an annual rate of 3.7% in December, up from 3.3% in November.

Air transport and rising petrol, diesel, gas and food prices are the most significant drivers to the increase in annual inflation between November and December.

The main downward pressures to inflation between November and December came from furniture and furnishings and clothing.

The CPI rose by 1.0 per cent between November and December this year compared with a rise of 0.6 per cent a year ago. The 1.0 per cent 1-month change this year is a record increase for a November to December period. Between 1996 and 2008, the 1-month change between November and December has varied between a fall of 0.4 per cent and an increase of 0.6 per cent.

Transpor prices, overall, rose by 3.6 per cent, the largest ever monthly increase on record. By far the largest upward effect came from air transport where fares rose by 41.8 per cent (such an increase is not unusual for a November to December period). The next largest upward effect came from fuels and lubricants where prices rose by 2.8 per cent, the largest increase for a November to December period since 1996.

Housing and household services prices, overall, rose by 1.4 per cent, the largest ever increase for a November to December period. The largest upward effect came from gas where average bills rose due to some of the major energy suppliers increasing their tariffs in December 2010. The next largest upward effect came from liquid fuels, where prices rose sharply reflecting the increase in the price of oil between November and December.

Food and non-alcoholic beverages prices, overall, rose by 1.6 per cent, the largest rise for a November to December period on record. The upward effects within this category were widespread with the most significant coming from fruit and vegetables.

The most significant downward contribution to the 1-month change in the CPI between November and December 2010 came from clothing and footwear. Prices, overall, fell by 1.9 per cent with the largest downward effect coming from garments, which, as usual, fell in price between November and December.


TradingEconomics.com, UK Office for National Statistics
1/18/2011 10:38:48 AM