Commenting on data from the Office of National Statistics, that showed the annual rate of CPI inflation increase from 3.9% in November to 4.0% in December 2023, Dr. Roger Barker, Director of Policy at the Institute of Directors, said:
“After nine straight months of monthly declines, December’s increase in the headline inflation rate was an unwelcome surprise. The upward blip was primarily caused by sharp increases in alcohol and tobacco prices. This price category is currently rising at an annualised rate of 12.8%, and is being partly driven by the increases in tobacco duty announced in the autumn statement.
“Inflation may give us a slightly bumpy ride during the next couple of months. Next month’s figure will have to incorporate a 5% rise in the Ofgem utility price cap from 1st January, and could also therefore tick upwards.
“However, inflation in the economy is still broadly moving in the right direction. Goods inflation fell from 2.0% to 1.9% in December, although services inflation was unchanged. We still believe that the Bank of England should consider a cut to interest rates sooner rather than later in order to provide a boost to depressed levels of business confidence.”