Surprise rise in inflation confounds economist predictions – Chamber

UK inflation rose unexpectedly in December, confounding economists who were predicting a minor fall, business leaders said today.

The consumer price index (CPI) measure of inflation rose for the first time in 10 months in December, increasing to four per cent from a more-than-two-year low 3.9 per cent in November.

The Office for National Statistics (ONS) said a rise in tobacco duty lay behind the increase, the ONS said.

A fall to 3.8 per cent had been predicted by economists, according to a Reuters poll.

But instead inflation rose from 3.9 per cent in the 12 months to November.

The full effects of increased shipping costs due to Red Sea diversions, amid Houthi fighter vessel attacks, will not have been captured by the data, as shipping prices had the steepest rises towards the end of the month.

Cameron Uppal (pictured), policy and public affairs advisor at Greater Birmingham Chambers of Commerce, said: “This morning's CPI announcement has confounded many city analysts that were predicting a minor fall in the rate of inflation.

“After seeing record rates of high inflation last year, it is evident from discussions with our members that inflation is still a concern for local businesses going into the start of this year.

“This is highlighted in our latest Quarterly Business Report where 30 per cent of businesses revealed that inflation was more of a concern than three months ago.

“In what is likely to be a General Election year, and with the Spring Budget imminently on the horizon, it will be interesting to see what measures the Government look to introduce to ease inflation and reach their own target of getting inflation down to two per cent. 

“As a voice of business in the region, advocating for the needs of our members, we are continuing to lobby the Government on tackling underlying cost pressures firms are facing- coupled with entrenched recruitment challenges, easing supply chain disruption with our European counterparts and advocating for business rate reforms.”