Surprise increase in UK inflation

The UK’s inflation rate rose to a figure of 0.2% during December, according to new data from the Office for National Statistics (ONS).

This unexpected increase, measured by the Consumer Prices Index (CPI), marks the first rise above 0.1% since January 2015.

Transport costs, including air fares, were key factors contributing to the rise, with the cost of air fares increasing by 46% in December.

Petrol prices also fell less in December than when compared to the same period in the previous year, helping to contribute to the overall rise in inflation.

A fall in food, tobacco and alcohol costs helped to offset the increase in transport costs to a degree.

Monthly inflation rates have lingered between -0.1% and 0.1% for the past 11 months, partly as a result of the lower cost of oil and competition between the major supermarkets.

Meanwhile, the Retail Prices Index, which takes housing costs into account, rose to 1.2% in December, up from November’s figure of 1.1%.

The latest figures have reinforced the opinion of many economists that the Bank of England’s Monetary Policy Committee is unlikely to increase interest rates in the coming months.