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UK consumer price inflation fell in December 2022 for the second consecutive month, reaching an annual three-month low of 10.5%, the latest figures from Britain's official statistics office, the ONS, showed.

This may offer some comfort to the Bank of England and British households, but at the same time food and drink prices continued to accelerate, rising at the fastest rate since 1977.

The Consumer Price Index (CPI) rose 0.4% in December from November, when it also rose 0.4% on a monthly basis.

From a year earlier, consumer inflation slowed to 10.5% in December from 10.7% in November and after peaking at 11.1% in October, the highest level since October 1981.

Transport prices were the biggest contributor to the decline in inflation, with their growth slowing to 6.5% from 7.2% in November thanks to cheaper motor fuels.

Average petrol prices fell by 8.3p a liter between November and December.

There was also a slowdown in price growth in clothing and footwear (to 6.5% from 7.5%) and in the "leisure and culture" sector (to 4.9% from 5.3%).

At the same time, however, spending on food and soft drinks rose as much as 16.8% in December from a year earlier (from 16.4% in November), the biggest price increase since September 1977.

There was also accelerated price growth in the "restaurants and hotels" sector - with 11.3% on an annual basis compared to 10.2% a month earlier, which is the most solid increase since 1991.

"Food spending continues to rise, with prices also rising in shops, cafes and restaurants," said ONS chief economist Grant Fitzner.

Core inflation (the core CPI index excluding energy, food, alcohol and tobacco prices), which many economists consider a better gauge of underlying inflation trends, rose for the second month in a row in December by 6.3% from a year earlier. early, while market expectations were for growth to slow to 6.2%.

Compared to a month earlier, the core inflation in December 2022 rose by 0.5% after growth by 0.35 in November and expectations for a rise of 0.4 percent.

Last November, the Bank of England forecast that core CPI would fall to around 5% by the end of 2023 as energy prices stabilise, but central bankers warned of continued pressure on inflation from a tight labor market and some other factors.

Financial markets expect the ECB to raise its key interest rate to 4.0% from 3.5% at its first meeting of the year on February 2, when the central bank will also publish its quarterly update of its economic growth and inflation forecasts. .

Why inflation keeps rising

Great Britain