Inflation in Britain rises to 3.4% due to tobacco and air fares & more related News Here

Higher tobacco prices and airfares pushed Britain’s inflation rate up 3.4% in December, according to official figures.

The rise in average prices across the UK economy – the first in five months – was just above expectations, with many economists predicting only a modest rise of 3.3%.

The Office for National Statistics (ONS) said, “The timing of return flights over the Christmas and New Year period is likely to have contributed to the cost of airfares”. This also reflected the increase in tobacco duty introduced in late November.

This is the last set of monthly inflation data released before the Bank of England’s decision on interest rates in February.

“In addition to tobacco and transport prices, rising food costs, particularly bread and cereal prices, were also the cause of the rise,” said Grant Fitzner, ONS chief economist.

“These were partially offset by declines in rent inflation and lower prices for a range of recreational and cultural purchases.”

In response to the figures, Chancellor Rachel Reeves said her priority was to cut the cost of living, citing measures including a freeze on rail fares and prescription charges in the November budget.

“My choice is to take money out of bills and into the pockets of working people.

“There is still much more to do, but this is the year Britain turns a corner,” Reeves said.

Shadow Chancellor Mel Stride blamed the government’s “economic mismanagement” for the increase.

He said: “Record-high tax burdens and irresponsible borrowing are stunting growth and fueling inflation – making working people worse off.”

Inflation in the UK is a measure of the Consumer Price Index, which is a virtual basket of hundreds of everyday goods and services selected by the ONS including things such as bread, fruit, furniture and various items of clothing.

The prices of these items are tracked by the ONS over the past 12 months, and the basket is regularly updated to reflect purchasing trends.

Figures show transport prices rose 4% in the 12 months to December.

The ONS said the biggest increase came from air fares, which increased by a large amount compared to last December.

Part of this depended on timing – last December flight prices peaked on Christmas Eve and New Year’s Eve. This year they were recorded on 23rd and 30th December.

Food and non-alcoholic beverages prices rose 4.5% in the year to December, with bread and cereals and vegetables driving the overall increase.

Compared to European neighbours, Britain had a higher December inflation rate.

Inflation in Germany stood at 2% as of December – it has been a year since UK inflation has been below Germany’s. In France the rate was 0.7%.

Former Bank of England rate-setter Michael Saunders said the December rise was “not the start of a new rise, it reflects a variety of temporary irregular factors”.

“So we won’t see inflation going up, but we have an issue that inflation is relatively stable and the underlying trends are well above the 2% inflation target,” he told BBC Radio 4’s Today programme.

He said the Bank of England was unlikely to cut interest rates in February, but expected some “gradual” cuts this year.

“The reason they can’t cut early is because inflation and wage growth are still too high for comfort,” he said.