Inflation doubled after curbs eased
INFLATION more than doubled last month, due to rising prices for oil, clothes and video games and the relaxation of Covid control measures over Christmas.
The figure, as measured by the consumer price index, rose in annual terms from 0.3 per cent in November to 0.6 per cent in December.
The rise was greater than expected after economists had forecast CPI inflation of 0.5 per cent.
The Office for National Statistics said rising prices for toys, video games and consoles were the biggest contributor to the increase in the cost-of-living last month. Other factors included rising oil and clothes prices.
It said that the cost of air and sea fares rose in December, as the relaxation of lockdown measures saw many rush to spend yuletide with loved ones which increased demand. The Bank of England has an inflation target of two per cent but the pandemic saw it almost tumble to zero during the first lockdown as the economy ground to a halt. Samuel Tombs, Pantheon Macroeconomics chief UK economist, said CPI inflation is likely to leap to 1.5 per cent in April, as energy regulator Ofgem is likely to increase the cap on default tariffs.
The housing market has been enjoying a boom thanks to Chancellor Rishi Sunak’s stamp duty holiday and yesterday, the ONS said that average house prices had hit a record high of £250,000 in November.
The 7.6 per cent increase in house prices is the strongest growth the market has seen in nearly five years, it said.
The average cost of a home in Wales rose 7 per cent to £180,000, while England saw house price growth of 7.6 per cent, up to £267,000.