UK December CPI Rises 4% Year-on-Year, Exceeding Expectations

Main Cause: Tobacco Tax Increase
Expectations for May Central Bank Rate Cut Dashed
Pound Sterling Value Rises

The consumer price inflation rate in the UK exceeded expectations, reaching the 4% range.

Oxford Street, London, UK
Photo by AP Yonhap News

On the 17th (local time), the UK Office for National Statistics announced that the Consumer Price Index (CPI) rose by 4.0% year-on-year last month. This figure not only marked the lowest level in the past two years compared to the previous month (annual 3.9%) but also surpassed the expert forecast of 3.8% compiled by the Wall Street Journal (WSJ).

With inflation rising higher than expected, hopes for a central bank interest rate cut in May diminished, and the value of the pound increased. Previously, as inflation rates declined faster than anticipated, there were expectations that inflation would return to the central bank's target level of 2% annually by April or May. Regarding this, UK Chancellor of the Exchequer Jeremy Hunt said, "As seen in the US, France, and Germany, inflation does not fall in a straight line," adding, "Our plan to tame inflation is working well, and we will maintain it."

During the same period, the US inflation rate rose from 3.1% to 3.4%, and the Eurozone's increased from 2.4% to 2.9%. The UK Office for National Statistics cited the tobacco tax hike implemented at the end of November last year as a major factor driving inflation. The inflation rate for food and non-alcoholic beverages fell from 9.2% annually to 8.0%, marking the lowest level since April 2022.

Excluding volatile items such as food and energy, the core inflation rate remained steady at 5.1% annually, unchanged from the previous month. Experts had predicted a core inflation rate of 4.9% annually.

This content was produced with the assistance of AI translation services.