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Inflation in the UK falls for the second month in a row to 10.5%

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LONDON — Inflation in Britain fell for the month, in line with economists’ expectations, as spending on fuel, clothing and leisure dragged the index down.

In December, inflation decreased to 10.5% from 10.7% in November. This was reported by the British Office for National Statistics on Wednesday. A group of economists polled by Reuters had forecast the UK consumer price index to reach 10.5% in December, down from a 41-year high of 11.1% reached in October.

Core CPI, which excludes food, energy, alcohol and tobacco, was steady at 6.3% in December, the ONS said.

The department noted that transport, clothing and recreation made the biggest contribution to the decline, compensating for growth in housing and household services, food and non-alcoholic beverages.

Inflation is set to rise sharply in 2022 due to a sharp rise in energy prices as Western sanctions block access to Russian oil and gas supplies. Politicians are fighting rising inflation by raising interest rates, and British Prime Minister Rishi Sunak on January 4 promised halve UK inflation to “ease the cost of living and give people financial security”.

The last time on December 15, the Bank of England raised the main interest rate by 0.5 percentage points to 3.5%. According to Reuters, financial markets expect a further increase to 4% when it meets to determine the next steps in monetary policy on February 2. .

The UK has been rocked by waves of industrial action since late last year, with teachers, rail workers, civil servants and nurses planning to strike this month and early February. The government responded to the proposal of an anti-strike bill intended to introduce “minimum service rules”.

Workers’ pay remains dwarfed by the rate of inflation, with average UK wages increasing by 6.4% year-on-year between September and November 2022. ONS said on January 17.

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“While there are some signs that inflation may have peaked, prices will remain high in the coming months,” warned Helen Dickinson, chief executive of the British Retail Consortium.

“Retailers are determined to support their customers throughout this cost of living crisis. They are keeping prices on many essentials affordable, expanding price ranges, increasing pay for their own staff and offering discounts to vulnerable groups.”

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