UK inflation climbs to 0.2 per cent in December: ONS

UK inflation registered its second consecutive month of growth in December, after remaining close to or below zero for much of last year.

The rate rose to an 11-month high, with a sharp rise in air fares offsetting falling food and clothing prices, according to the Office for National Statistics.

But house price inflation, which is not in the CPI index, continues to run far ahead of general inflation. The ONS said UK house prices increased by 7.7 per cent in the year to November 2015, up from 7 per cent in the year to October 2015. The biggest rises were in the east of England.

James Tucker, head of CPI at the ONS, said: “While this modest rise takes CPI to its highest level for 11 months, it is still at historically low levels.”

The Treasury pointed out that the figure continued the low inflation trend and that wages were still rising well ahead of CPI.

Last week, the Bank of England left interest rates unchanged at 0.5 per cent, with expectations growing that there will be no rise in base rate throughout 2016. Analysts expect inflation to remain well below the Bank of England’s 2 per cent target for the rest of the year.

The Retail Prices Index, a separate measure that includes housing costs, grew by 1.2 per cent, up from 1.1 per cent in November.

An ONS measure of core consumer price inflation – which strips out changes in the price of energy, food, alcohol and tobacco – rose to an 11-month high of 1.4 per cent compared with economists’ expectations for it to hold at 1.2 per cent.

Services price inflation rose at its fastest pace since September 2013, up 2.9 per cent on the year.

Factory gate prices dipped 1.2 per cent – the smallest drop in a year – and in line with economists’ forecasts in a Reuters poll.