Inflation ticks down in December as hotel and tobacco prices fall

The rate of inflation fell slightly in December 2024 – a welcome boost in another bruising week for the Government.

December’s figure from the Office for National Statistics (ONS) shows inflation was at 2.5% in the final month of 2024 – down from 2.6% in November.

Grant Fitzner, the ONS chief economist said: “Inflation eased very slightly as hotel prices dipped this month but rose a year ago. The cost of tobacco was another downward driver, as process increased by less than this time last year.

“This was partly offset by the cost of fuel and also second-hand cars, which saw their first annual growth since July 2023.”

Analysts had predicted that inflation would remain at 2.6% in December.

Martin Sartorius, principal economist at the CBI, said: “Inflation remained moderately above the Bank of England’s 2% target in December, reflecting the impact of ongoing price pressures such as strong wage growth. Looking ahead, we expect inflation will stay elevated this year, partly due to Autumn Budget measures contributing to higher prices.

“Persistent, above-target inflation supports our expectation that the Monetary Policy Committee will loosen policy at a gradual, quarterly pace throughout 2025. The next rate cut is still likely to come in February, which will bring some respite for businesses and households as they continue to face high borrowing costs.”

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