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UK inflation eased during the month, in line with economists’ expectations, as the cost of fuel, clothing and leisure activities dragged the index lower.

Inflation fell to 10.5% in December from 10.7% in November. This was announced by the British Office for National Statistics on Wednesday. A panel of economists polled by Reuters had forecast Britain’s consumer price index to hit 10.5% in December, down from October’s 41-year high of 11.1%.

The core CPI, which excludes food, energy, alcohol and tobacco, held steady at 6.3% in December, the ONS noted.

The agency said the biggest downward contributors came from the transportation, clothing and recreation sectors, offsetting increases in housing and household services, food and soft drinks.

Inflation rates have soared throughout 2022, fueled by soaring energy prices as Western sanctions hamper access to Russian oil and gas supplies. Policymakers are combating rising inflation with a series of rate hikes.

Most recently, the Bank of England raised its key interest rate by 0.5 percentage points to 3.5% on December 15th. According to Reuters, the financial markets expect a further increase to 4% when they decide on the next monetary policy steps on February 2nd.

https://www.cnbc.com/2023/01/18/uk-inflation-rate-dips-for-second-straight-month-to-hit-10point5percent.html UK inflation falls to 10.5% for second straight month