ONS Reports Drop In Inflation For December 2024

This week, the Office for National Statistics (ONS) reported a decline in UK inflation to 2.5%, a decrease of 0.1% from the previous month. This indicates that the price of goods and services has increased by 2.5% in the year leading up to November 2024, compared to an annual increase of 2.6% in the year to October 2024.

This unexpected reduction in inflation is likely to be welcomed by consumers. It raises prospects for a potential reduction in interest rates by the Bank of England (BoE) when the Monetary Policy Committee (MPC) convenes on 6th February.

The ONS summarised:

• The Consumer Prices Index (CPI) rose by 2.5% in the 12 months to December 2024, down from 2.6% in the 12 months to November.

• On a monthly basis, CPI rose by 0.3% in December 2024, down from 0.4% in December 2023.

• The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 3.5% in the 12 months to December 2024, unchanged from November.

• On a monthly basis, CPIH rose by 0.3% in December 2024, down from 0.4% in December 2023.

• The largest downward contribution to the monthly change in both CPIH and CPI annual rates came from restaurants and hotels; the largest upward contribution to both came from transport.

• Core CPIH (excluding energy, food, alcohol, and tobacco) rose by 4.2% in the 12 months to December 2024, down from 4.4% in November; the CPIH goods annual rate rose from 0.4% to 0.7%, while the CPIH services annual rate fell from 5.7% to 5.4%.

• Core CPI (excluding energy, food, alcohol, and tobacco) rose by 3.2% in the 12 months to December 2024, down from 3.5% in November; the CPI goods annual rate rose from 0.4% to 0.7%, while the CPI services annual rate fell from 5.0% to 4.4%.

Source: ONS