UK inflation doubled in December, according to the Office for National Statistics.
Despite a fall in food and drink prices, the cost of transport, recreation and culture rose in the run-up to Christmas. Prices were 0.3% higher than November and 0.6% up on the same period a year ago.
The ONS said: “Despite the travel restrictions in place in December, prices for air fares followed their usual seasonal pattern, with price increases between November and December 2020.”
“In the UK, inflation has still been fairly benign though core prices have been higher than the more generally used headline number,” said Michael Hewson, the CMC Markets UK chief analyst. “It has also been tougher to track UK inflation in the past 12 months due to the unavailability of some products which are normally used to calculate prices in the inflation basket.
“Nonetheless, price pressures have been subdued with November prices falling back to 0.3 per cent, though core prices are higher at 1.1%,” he added.
The UK inflation has been falling over the past two years and fell to record lows of 0.2% in August, following the government’s Eat Out to Help Out scheme and VAT cut.
Jon Hudson is the UK Equity Fund Manager at Premier Miton Investors. He commented on the UK inflation in December: “At 0.8%, the inflation rate remains well below target but given the lockdowns it is unsurprising.
“Should the vaccine be successfully rolled out and restrictions reduced, it is likely inflation will pick up in the second half of the year, driven by consumers spending the money they have been unable to over the past year, and higher commodity prices.”