UK inflation reaches 2.9% in December

| January 19, 2010 | 0 Comments

The Office for National Statistics has today announced that Consumer Price Inflation (CPI) rose at its fastest annual pace in 9 months in December.

CPI rose 0.6% in December on the month, taking the annual rate to 2.9%, up from 1.9% the previous month.

This was the largest monthly rise in the annual index since records began and exceeded analysts’ expectations who had forecast a rise to 2.6%.

Meanwhile, Retail Price Inflation (RPI), which includes mortgage costs and is used as the basis for many wage deals, rose to 2.4% - the highest level since November 2008. RPI inflation has been negative for much of the last year.

Today’s figures mean core price inflation has risen well above the Bank of England’s target of 2%. However, the Bank’s Governor, Mervyn King, recently warned that inflation could “rise sharply over the next few months” - many analysts believe it could exceed the 3% mark.

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