According to the National Statistics Bureau, UK inflation doubled in December.
Despite the falling prices of food and drink, transportation costs, recreation and culture costs rose up until Christmas. Prices were 0.3% higher than in November, and increased by 0.6% over the same period a year ago.
ONS said: “Despite travel restrictions in December, airfare prices continued in normal seasonal patterns, with prices rising between November and December 2020.”
“In the UK, core prices are higher than the more commonly used headline numbers, but inflation was still quite benign,” said Michael Hewson, chief analyst at CMC Markets UK. . “It has also been difficult to track UK inflation over the past 12 months as some products normally used to calculate the prices of inflation baskets are not available.
“Nevertheless, core prices are high at 1.1%, but prices in November are back to 0.3%, which has kept price pressure down,” he added.
UK inflation has been declining over the past two years, falling to record a low of 0.2% in August.
Jon Hudson is the UK Equity Fund Manager for Premier Miton Investors. He commented on UK inflation in December: “At 0.8%, inflation is well below target, but it’s not surprising given the lockdown.
“If the vaccine is deployed normally and restrictions are reduced, inflation could recover later this year due to rising consumers and product prices spending money they couldn’t do in the past year.”
