The U.K. Inflation rate soared to a 30-year high in December as higher energy costs, resurgent demand, and supply chain issues continued to drive up consumer prices. Inflation hit an annual 5.4%, its highest since March 1992 and up from 5.1% in November, a decade high.
Economists had expected an increase of 5.2%. The consumer prices rose 0.5%, outstripping economist projections for a 0.3% climb. The surging cost of living raises expectations that the Bank of England will look to hike interest rates again.In December, the BOE became the first major central bank to lift borrowing costs from their pandemic-era lows. Markets will closely watch the Monetary Policy Committee’s next meeting on Feb. 3, with policymakers considering another rate increase following the 15-basis-point hike to 0.25% in December.
The ONS said that the m Consumer Prices Index including owner occupiers’ housing costs (CPIH), rose by 4.8% in the 12 months to December. They are up from 4.6% in November and the highest since September 2008. The largest contributions came from housing and household services and transport.