Inflation set for sharp rise after December rebound

Consumer prices rose 0.6% in annual terms after a 0.3% increase in November, the Office for National Statistics said.

Stats SA released the inflation figures on Wednesday.

'Transport costs, including air, sea and coach fares, as well as petrol prices, rose as some travel restrictions eased during parts of the month.

Clothing and footwear prices - which rose last month, unlike in December 2019 - also contributed to higher inflation.

The increases in petrol and other prices offset smaller falls in the costs of vegetables and meat.

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Suring demand for computer games and consoles and children's toys pushed up inflation further, with annual recreation and culture inflation hitting its highest level since August.

"Stewing beef was 2.9 per cent more expensive than it was in November 2020 and 12.4 per cent more expensive than in December 2019", data showed. "Compared with November, annual inflation fell in nine Member States, remained stable in eight and rose in ten".

Prices in the oils and fats category climbed by 10.2 per cent over 12 months and by 1.6 per cent over one month.

ONS deputy national statistician for economic statistics Jonathan Athow said: "Clothing prices put upward pressure on inflation in December, despite some evidence of continued discounting".

Allan Monks, UK economist at JPMorgan, predicted that prices will climb "sharply into the spring, led by rising energy inflation and the expiry of the current Value-Added Tax cut from April".