UK inflation eases to 2.5% in December as core price growth falls sharply

Posted on January 16, 2025   |  

British inflation unexpectedly dropped to 2.5% in December from 2.6% in November.

Economists had expected inflation to stay at 2.6%, so the drop was unexpected.

The Bank of England had forecasted 2.5% inflation for December.

The release of inflation data caused the British pound (sterling) to decline.

Investors sold British government bonds, concerned that high inflation would prevent the Bank of England from cutting rates, which could hurt economic growth.

Core inflation, excluding energy, food, alcohol, and tobacco, fell from 3.5% in November to 3.2% in December.

Services inflation dropped to 4.4% in December, its lowest level since March 2022, compared to 5.0% in November.

Economists had expected services inflation to fall to 4.9%, so the 4.4% figure was lower than expected.