LONDON (dpa-AFX) - UK consumer price growth slowed to its weakest level in nearly two years in December, driven by a big fall in fuel prices, offering some respite to Britons who are worried over their economic prospects amid the Brexit chaos.
The consumer price inflation eased to 2.1 percent from 2.3 percent in November, figures from the Office for National Statistics showed on Wednesday. The slowdown was in line with economists' expectations.
'Inflation eased mainly due to a big fall in petrol, with oil prices tumbling in recent months,' ONS Head of Inflation Mike Hardie said.
'Air fares also helped push down the rate, with seasonal prices rising less than they did last year. These were partially offset by small rises in hotel prices and mobile phone charges.'
Core inflation, which excludes prices of energy, food, alcoholic beverages and tobacco, climbed to 1.9 percent from 1.8 percent. Economists had expected the rate to remain unchanged.
The latest CPI inflation figure was the lowest since January 2017, when it was 1.8 percent. Inflation peaked at 3.1 percent in November 2017.
Price growth slowed since then, while wages have been rising. However, the Brexit uncertainty prompted households to rein in spending over the past few months.
Britain is preparing to leave the European Union on March 29, 2019.
On Tuesday, Prime Minister Theresa May lost the crucial Brexit deal vote by a huge margin and the crushing defeat has led to a no-confidence vote against her, which will take place on Wednesday.
Elsewhere on Wednesday, Bank of England Governor Mark Carney told lawmakers during a hearing that the strengthening of the pound sterling following May's defeat in parliament suggested that markets are now less concerned about a 'no-deal' Brexit.
Instead, investors could be expecting an extension of the process of leaving the European Union, he said.
The Bank of England had warned earlier that a no-deal Brexit would cause a severe recession in the UK, the kind not even seen during the global financial crisis a decade ago.
The central bank's analysis projected that inflation could hit 6.5 percent as the pound dives in a no-deal or disorderly Brexit.
Governor Carney also predicted that food prices could jump as much as 10 percent if there is a 25 percent slump in the pound due to a no-deal Brexit.
The bank expects inflation to fall below the 2 percent target in coming months due to lower oil prices and forecast 1.75 percent inflation for January.
Inflation, based on the CPI including owner occupiers' housing costs, or CPIH, fell to 2 percent in December from 2.2 percent, matching expectations. That was also the lowest since the start of 2017.
The input price inflation dropped to 3.7 percent form 5.3 percent in November, in line with economists' expectations. Output price inflation eased to 2.5 percent from 3 percent and was lower than the 2.9 percent economists had predicted.
Separately, the ONS reported that house price inflation rose to 2.8 percent in November from 2.7 percent in October. Economists had forecast a higher rate of 3 percent.
Copyright RTT News/dpa-AFX
© 2019 AFX News
