Inflation has risen unexpectedly for the first time in almost a year to 4 per cent.
So, what has caused the increase and what does it mean for consumers?
FactCheck takes a look.
What is inflation and how is it calculated?
Inflation measures how much more expensive goods and services have become over a certain period
Every month the Office for National Statistics (ONS) checks the prices of a whole range of goods and services, recording the cost of over 700 things that people regularly buy, ranging from everyday items such as a loaf of bread to larger ones like a holiday.
The price of this ‘basket’ tells us the overall price level – known as the Consumer Prices Index (CPI).
To calculate the rate of inflation the ONS compares the cost of the basket to what it was a year ago, with the change in the price level over the year being the rate of inflation.
Why has inflation risen and what does it mean for consumers?
Inflation has risen for the first time since February last year, increasing from 3.9 per cent in November to 4 per cent in December. This was despite experts expecting it to drop slightly this month.
The rise means a product that, for example, would have cost £10.00, will now cost £10.40 instead.
The increase comes after alcohol and tobacco inflation hit 12.8 per cent in December 2023 – the highest rate in more than 31 years – largely following the increased tobacco duty in November.
Chancellor Jeremy Hunt announced the hike in tax on tobacco in November 2023’s autumn statement, with tobacco prices surging by 16 per cent year-on-year last month.
Grant Fitzner, ONS chief economist, said: “The rate of inflation ticked up a little in December, with rises in tobacco prices due to recently-introduced duty increases.
“These were partially offset by falling food inflation, where prices still rose but at a much lower rate than this time last year.”
Food inflation dropped to 8 per cent last month – down from 9.2 per cent in November and the lowest rate since April 2022.
(Image Credit: Andy Rain/EPA-EFE/Shutterstock)
