 Shoppers are reflected in a shop window as they carry their shopping bags through the town center in Maidstone, UK, in this Dec. 15, 2010 photo. Consumer prices rose 3.7 percent in December from a year earlier, data shows. Bloomberg photo |
U.K. inflation accelerated more than economists forecast to an eight-month high in December as fuel and food prices rose, adding to pressure on the Bank of England to raise the key interest rate from its record low.
Consumer prices rose 3.7 percent from a year earlier after a 3.3 percent increase in November, the Office for National Statistics said Tuesday in London. On the month, prices rose 1 percent, the most since records began in 1996.
Inflation has held above the government’s upper limit for 10 months and may accelerate further as a sales-tax increase takes effect this month. The central bank, which maintained emergency stimulus last week, has said inflation will slow as a public-spending squeeze wrings price gains out of the economy.
Still, Prime Minister David Cameron has said price gains are “concerning” and lawmaker Michael Fallon said this week rates should rise now.
“The bank so far has been saying that inflation will fall but pressure is mounting on them, it’s not an easy task now,” Fabio Fois, an economist at Barclays Capital in London, said in an interview. “We may see some shift in the rhetoric at the bank to acknowledge the inflation risks.”
The monthly increase in December compared with economists’ forecast for a 0.7 percent increase. So-called core inflation, which excludes costs of energy, alcohol, food and tobacco, rose an annual 2.9 percent.
Retail-price inflation, a measure of the cost of living used in wage negotiations, rose 4.8 percent in December from 4.7 percent the previous month. Excluding mortgage costs, inflation by that measure was 4.7 percent.
The Bank of England’s Monetary Policy Committee held the key interest rate at a record low of 0.5 percent for a 23rd month last week and its bond-purchase plan at 200 billion pounds ($319 billion).
Consumer prices rose 3.7 percent from a year earlier after a 3.3 percent increase in November, the Office for National Statistics said Tuesday in London. On the month, prices rose 1 percent, the most since records began in 1996.
Inflation has held above the government’s upper limit for 10 months and may accelerate further as a sales-tax increase takes effect this month. The central bank, which maintained emergency stimulus last week, has said inflation will slow as a public-spending squeeze wrings price gains out of the economy.
Still, Prime Minister David Cameron has said price gains are “concerning” and lawmaker Michael Fallon said this week rates should rise now.
“The bank so far has been saying that inflation will fall but pressure is mounting on them, it’s not an easy task now,” Fabio Fois, an economist at Barclays Capital in London, said in an interview. “We may see some shift in the rhetoric at the bank to acknowledge the inflation risks.”
The monthly increase in December compared with economists’ forecast for a 0.7 percent increase. So-called core inflation, which excludes costs of energy, alcohol, food and tobacco, rose an annual 2.9 percent.
Retail-price inflation, a measure of the cost of living used in wage negotiations, rose 4.8 percent in December from 4.7 percent the previous month. Excluding mortgage costs, inflation by that measure was 4.7 percent.
The Bank of England’s Monetary Policy Committee held the key interest rate at a record low of 0.5 percent for a 23rd month last week and its bond-purchase plan at 200 billion pounds ($319 billion).
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