Food prices, furniture, clothes and housing costs rise as cost of living squeeze deepens
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, has brought forward his forecast for the next interest rate hike to February, from March, following the inflation figures.
Inflation rates for four key components likely will rise further over the coming months, culminating in the headline rate probably peaking slightly above 6% in April.
First, clothing inflation, which increased to 4.2% in December, from 3.5% in November, likely will rise further as the anniversary of the Q1 2021 lockdown is reached. Second, December’s 8.7% rate of core output price inflation—the highest since at least 1996, when consistent records begin—points to scope for core goods inflation to step up from December’s 5.2% rate.
