In December 2016, consumer prices (CPI index) in the UK rose 1.6% compared with the same month in 2015, after rising by 1.2% in November, according to the Office for National Statistics (ONS) of the country. The price increase was a record since July 2014, when it was the same 1.6%. Meanwhile, the experts expected an average gain to just 1.4%.
Compared with the previous month, consumer prices rose 0.5% on growth forecast at 0.3%.
Inflation in the United Kingdom remains below the target level of the Bank of England – 2%, set in 2013. The Bank of England expects inflation to accelerate to the target level at the end of this year.
Food prices fell 0.3% in July from the previous month, alcohol and tobacco rose 0.3%, and clothing and footwear fell 3.4%.
CPI Core index, which excludes prices of food, alcohol, tobacco and energy prices, rose in December by 1.6% after rising 1.4% in November. Analysts on average had expected an increase by 1.4%.
Retail prices (RPI index) rose last month by 2.5% year on year and by 0.6% compared to November. That RPI index is used by British employers when negotiating salary. The difference in the dynamics of the CPI and RPI indexes is linked based on housing costs in the RPI, as well as different weights fares, insurance and gasoline prices.
The ONS also reported on Tuesday that the pace of the UK housing price growth in November slowed to 6.7% in annual terms, from the revised 6.4% in November. During the month, prices rose 1.1%.
After the publication of the report, GBP/USD was trading at 1.2161, compared with 1.2164 before the publication, EUR/GBP rose 0.8776 against 0.8771, and GBP/JPY fell to 137.53 compared to the previous value of 137.58.
The European stock markets are in the red zone. FTSE 100 index fell 0.30%, EURO STOXX 50 index fell 0.49%, French CAC 40 fell 0.45%, and German DAX 30 lost 0.64%.