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Finance

Posted By Global Banking and Finance Review

Posted on January 15, 2025

UK inflation falls to 2.5%, core price measures slow by more

LONDON (Reuters) -British inflation unexpectedly slowed to an annual rate of 2.5% in December from 2.6% in November and core measures of inflation watched closely by the Bank of England fell more sharply, official figures showed on Wednesday.

Economists polled by Reuters had pointed to a headline inflation reading of 2.6%.

The BoE - which will announce its next interest rate decision on Feb. 6 - forecast in early November that inflation would be 2.5% in December.

Sterling fell after the figures were published.

Core inflation, which excludes energy, food, alcohol and tobacco prices, fell to 3.2% from 3.5% in November. The Reuters poll had pointed to a smaller drop to 3.4%.

Services inflation stood at 4.4% in December compared with 5.0% a month earlier, the ONS said. Economists had forecast it would dip only to 4.9%.

The BoE looks at both services and core inflation as a better guide of underlying price pressures in the economy, especially those caused by persistent wage growth.

(Reporting by Suban Abdulla and David MillikenEditing by William Schomberg)

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