Revealed: Which items have been hit worst as inflation makes surprise jump
Inflation has made an unexpected jump – and the bad news is that items we need most are the ones increasing in price the fastest.
Food and drink, alcohol, broadband, clothing and footwear – all are showing significant hikes in price.
And, if we are looking for a treat at a restaurant or perhaps a short break away in a hotel, expect to see prices continuing to go up as well.
The inflation increase has also dampened hopes of an early interest rate cut by the Bank of England.
Figures from the Office for National Statistics (ONS) showed the rate of Consumer Prices Index (CPI) inflation rose to four per cent in December, up from 3.9 per cent in November – marking the first increase since February last year.
The surprise rise in UK inflation comes after alcohol and tobacco inflation hit a high of more than 31 years last month, at 12.8 per cent.
Tobacco prices surged by 16 per cent year on year in December while alcohol inflation hit an average of 9.6 per cent as prices continued to rise after a duty rise on booze in August last year.
The average price of beer increased by 12.8 per cent in the year to December, up slightly from 12 per cent in November, while spirits rose by 8.9 per cent, up from 8.1 per cent, and wine increased by 7.8 per cent, up from 7.0 per cent.
Air fares also rose as usual between November and December, up by 57.1 per cent, compared with a 61.1 per cent rise a year ago. The annual rate for air fares was 0.8 per cent in December.
There was some relief for households as food inflation eased back sharply to eight per cent last month, down from 9.2 per cent in November and the lowest rate since April 2022. But that still means prices are continuing to rise sharply.
Among the small number of food items that saw an acceleration in the rate of inflation last month were pizza and quiche, with average prices increasing by 5.1 per cent in the year to December, up from 2.1 per cent in the year to November; flour (up by 12.6 per cent compared with 11.0 per cent); rice (up by 7.9 per cent compared with 7.2 per cent) and fresh or chilled fruit (up by 6.7 per cent compared with 6.0 per cent).
Non-alcoholic drinks that saw a jump in the rate were coffee (up by 11.9 per cent in December compared with 10.2 per cent in November) and mineral water (up by 14.2 per cent, compared with 12.8 per cent).
A majority of everyday products and services saw an easing of inflation last month, however.
Eggs saw a particularly sharp slowdown, with average prices up by 6.8 per cent in the year to December, down from a jump of 12.9 per cent in November.
Sugar, yoghurt, olive oil, fish, children’s shoes and fruit juices all saw inflation at least three percentage points lower in December than in November.
The average cost of petrol was down year-on-year by 8.0 per cent in December, a larger fall than the drop of 7.7 per cent in November, reflecting the decrease in prices last month.
Similarly, the average cost of a second-hand car was down by 8.4 per cent in the year to December, a larger fall than the drop of 5.4 per cent the previous month.
The increase in CPI came just hours after Rishi Sunak said the Government had met its pledge to halve inflation and claimed “it has continued to fall”.
Chancellor Jeremy Hunt insisted that the Government’s “plan is working”.
He said: “As we have seen in the US, France and Germany, inflation does not fall in a straight line, but our plan is working and we should stick to it.”
He said the inflation risk posed by the Red Sea crisis was one of the reasons for the UK-US military strikes against Houthi targets, as fears grow that it could push up the cost of oil, gas and goods.
Mr Hunt told broadcasters: “It’s precisely because we are concerned about what’s happening in the Red Sea that the UK has taken action with the United States and our other allies to secure freedom of navigation. We are obviously watching the situation very carefully.”
Most economists had expected inflation to edge lower to 3.8 per cent.
The latest data also showed the CPI measure of inflation including housing costs (CPIH) remained at 4.2 per cent in November while the Retail Prices Index (RPI) fell back to 5.2 per cent from 5.3 per cent.
Martin Beck, chief economic adviser to the EY Item Club, said while inflation is double the Bank’s two per cent target, it is still lower than policymakers had forecast.
He cautioned “there’s a good chance that inflation may rise again this month” but said hopes of a significant cut to energy bills in April and slowing UK wage growth should see inflation fall to two per cent by May.
