Economists polled by Reuters had forecast that the annual CPI rate would edge up to 5.2% in December from November’s 5.1% in Nov.
The increase in CPI to its highest since March 1992 reflected a wide range of goods and services, with the biggest impact coming from food and drink, followed by restaurants and hotels and furniture and household goods.
The Bank of England last month became the world’s first major central bank to raise interest rates since the start of the COVID-19 pandemic, a day after data showed CPI had unexpectedly surged to a 10-year high in November.
Rising inflation is also turning into a political problem for Prime Minister Boris Johnson’s government, which faces calls from the opposition and charities to offset an expected 50% rise in the regulated household energy prices this April.
The BoE forecasts CPI will peak at a 30-year high of around 6% in April due to the higher energy bills, and that it will take more than two years for CPI to return to its 2% target.
Financial markets see a high chance that the BoE will raise rates again on Feb. 3 and announce that it will allow its 875 billion-pound ($1.19 trillion) stock of government bonds to fall as the gilts begin to mature.
Wednesday’s figures showed that core CPI – which excludes sometimes-volatile food, energy, alcohol and tobacco prices – rose to a record high 4.2% in December from November’s 3.9%.
Retail price inflation – an older measure that the ONS says is no longer accurate, but which is still widely used by government and businesses – rose to 7.5% in December from a 30-year high of 7.1% in November.
