Fact Service (January 2021)

Issue 3

Inflation rises from previous low

Inflation rose to 0.6% CPI in December, up from 0.3% the month before. RPI was 1.2%, up from 0.9%.

Rising transport and clothes prices were to blame for the larger than expected increase, according to the Office for National Statistics (ONS). Inflation had previously hit a five-year low in September of 2020.

ONS deputy national statistician for economic statistics Jonathan Athow explained: "Clothing prices put upward pressure on inflation in December, despite some evidence of continued discounting. Transport costs, including air, sea and coach fares, as well as petrol prices, rose as some travel restrictions eased during parts of the month. These were partially offset by falling food prices, most notably for vegetables and meat."

With reference to the CPIH rate (Consumer Prices Index including occupiers’ housing costs), the ONS noted that the CPIH 12-month inflation rate was 0.8% in December 2020, up from 0.6% in November. Rising transport costs contributed 0.11 percentage points to the monthly change, while increasing prices for clothing, and recreation and culture items both contributed 0.10 percentage points. These were partially offset by falling food and non-alcoholic beverage prices.

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/december2020


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