Inflation in the UK has slightly eased going from 10.7% to 10.5% in the 12 months to December 2022.
The fall in the Consumer Price Index (CPI) was in line with city forecasts however, is still more than five times the Bank of England’s target of 2%.
Although it has reduced, the CPI figure still remains at one of the highest levels in 40 years as the cost of living crisis continues, with a peak of 11.1% recorded in October.
Alongside the inflation announcement, the Office for National Statistics (ONS) revealed the main driving forces behind the latest inflation figures.
Prices were higher prices in restaurants and hotels, as well as food and non-alcoholic beverages.
But it said falling fuel prices helped lower the CPI inflation figure, along with cheaper clothing and footwear.
What is rising in price the most?
Here is how prices are changing, according to the ONS:
- Housing and household services: (+26.6%)
- Food and non-alcoholic beverages: (+16.8%)
- Restaurants and hotels: (+11.3%)
- Furniture and household goods: (+9.8%)
- Transport: (+6.5%)
- Clothing and footwear: (+6.5%)
- Miscellaneous goods and services: (+5.4%)
- Health: (+5.1%)
- Recreation and culture: (+4.9%)
- Alcohol and tobacco: (+3.7%)
- Education: (+3.2%)
- Communication: (+2.0%)
Inflation figures are released each month by the ONS to show how the prices of everyday goods and services have changed over a 12-month period.
So, if something cost £1 a year ago and the rate of inflation was 2%, then it would now cost £1.02.
When inflation is high, it means you're able to buy less for the same amount of cash which causes problems when inflation outstrips wage growth.
Food inflation, which is still rising at the fastest pace in recent memory, is piling monumental pressure on households which are also being squeezed by rising interest rates and elevated energy bills.
Supermarkets in the UK have notably increased the price of their products over the last year with recent research by Which? revealing that budget items rose by 20.3% on average in December compared to the same month a year before.
Supermarkets’ luxury ranges also rose 12.6% and the price of branded items went up 12.5%.
Campaigners have warned that higher budget prices hit poorer households the hardest because it means more of their take-home income goes on essential food and there aren’t cheaper options.
The rising cost of food to shoppers is because making and transporting that food costs more which means supermarkets have to pay more to get the food they sell to the public, and that cost is being passed on.
These rising costs, which include energy bills, animal feed and transport expenses, are also effecting restaurants and hotels with the extra costs again being passed over to the consumer.
