UK inflation rises to highest in 30 years

DAVID MILLIKEN AND ANDY BRUCE

British consumer price inflation rose more than expected to 5.4% in December, its highest in almost 30 years, official data showed on Wednesday, putting pressure on the Bank of England to raise interest rates again next month.

Economists polled by Reuters had forecast that the annual consumer price index (CPI) rate would edge up to 5.2% in December from November's 5.1%.

The increase in CPI to its highest since March 1992 reflected a wide range of goods and services, the Office for National Statistics said, with the biggest impact coming from food and drink, followed by restaurants and hotels.

Economic disruption from the Omicron variant of coronavirus in December had only a negligible impact on the headline rate of inflation, however.

The Bank of England last month became the world's first major central bank to raise interest rates since the start of the Covid-19 pandemic, a day after CPI for November hit a 10-year high.

Rising inflation is also turning into a political problem for Prime Minister Boris Johnson's government, which faces calls from the opposition and charities to offset an expected 50% rise in the regulated household energy prices this April.

"I understand the pressures people are facing with the cost of living, and we will continue to listen to people's concerns," finance minister Rishi Sunak said in response to the data.

The BoE forecasts CPI will peak at a 30-year high of around 6% in April due to the higher energy bills, and that it will take more than two years for CPI to return to its 2% target. -Reuters