Slight ease in inflation figures with tobacco contributing factor

UK inflation dipped in December, with prices rising at 2.5%, down from 2.6% in November.

Tobacco was a downward driver, with prices rising by less than the same time last year, as were hotels, with prices falling by 1.9% in the month, compared with a rise of 3.1% a year ago.

The latest figures from the Office for National Statistics (ONS) show that a small downward effect also came from food and non-alcoholic beverages, with prices rising by 2.0% in December, unchanged from November last year.

Downward contributions in the annual rate of inflation between November and December last year came from two of the 11 food and non-alcoholic beverage classes, namely bread and cereals, and mineral waters, soft drinks and juices.

Meanwhile, upward contributions came from fruit, and sugar, jam, honey, syrups, chocolate and confectionery.

ONS Chief Economist Grant Fitzner said the inflation rate was “partly offset by the cost of fuel and also second-hand cars, which saw their first annual growth since July 2023”.

Within alcoholic beverages and tobacco, there was a large downward effect on the all-items 12-month rate change due to tobacco, but was partially offset by wine, where prices overall fell this year by less than a year ago. Meanwhile, in tobacco prices overall rose this year by less than a year ago, particularly for packs of 20 king size cigarettes and hand rolling tobacco.