THE rate of inflation has began to fall — giving hope that the worst of painful price rises may be over.
Official figures yesterday confirmed it dipped barely on the finish of the yr as petrol costs fell and retailers discounted garments.
Inflation in December was at 10.5 per cent, down from November’s 10.7 per cent.
The 2 months of falls got here after a 41-yr excessive of 11.1 per cent in October.
However the inflation rate continues to be 5 instances larger than the Financial institution of England’s goal of two per cent.
Meals costs soared by 16.8 per cent within the yr to December, with fundamentals equivalent to milk, cheese and eggs seeing the biggest will increase.
The price of sugar, jam, honey, chocolate, mushy drinks and juices additionally leapt, in accordance to the Workplace for Nationwide Statistics.
Inflation measures the rate at which costs have elevated on a variety of items in contrast to a yr in the past.
Groceries, power and gasoline prices have all been hit by a pandemic hangover, the struggle in Ukraine and a scarcity of important employees.
Chancellor Jeremy Hunt has mentioned that excessive inflation is “a nightmare for household budgets, destroys enterprise funding and leads to strike motion”. He added: “So, nonetheless robust, we’d like to stick to our plan to convey it down.”
Decrease inflation might imply there’s much less stress on the Financial institution of England to hike rates of interest.
However Metropolis merchants imagine they’ll nonetheless hit a peak of 4.5 per cent from the present 3.5 per cent — that means larger mortgage and borrowing prices.
Though inflation is softening, economists warn households will wrestle as actual pay progress is being eroded by larger costs, that means that extra earnings is being spent on necessities.
Whereas costs grew by 10.5 per cent in November, personal sector pay rose by simply 7.2 per cent and public sector pay by 3.3 per cent.
Dannie Hewson, monetary analyst at AJ Bell, mentioned: “It’s the primary time for the reason that pandemic that inflation has fallen for 2 months in a row — although the fall received’t really feel important to folks doing their weekly store.
“While costs on the pump have been falling, quite a bit of vital stuff continues to be going up. Vitality prices are nonetheless having a huge impact on lives.”