UK inflation falls for second month in a row but food prices are still on the rise

18 January 2023, 07:44 | Updated: 18 January 2023, 07:49

The rate of inflation has fallen for the second month in a row with some analysts pointing at the cost of living crisis beginning to ease.

Inflation fell to 10.5% in the year to December, compared to 10.7% in November.

A fall in fuel prices led to the drop, along with clothing and footwear.

The cost of food has also continued to rise - by 16.9% in the 12 months to December 2022, up from 16.5%, at the highest rate since September 1977.

Inflation is still close to a 40-year high.

Grant Fitzner, chief economist at the Office for National Statistics (ONS), said: "Inflation eased slightly in December, although still at a very high level, with overall prices rising strongly during the last year as a whole.

Read more: Nurses return to picket line as temps offered £40 an hour to break strike

Read more: Having cake in the office is 'like passive smoking', top food regulator warns

"Prices at the pump fell notably in December, with the cost of clothing also dropping back slightly.

"However, this was offset by increases for coach and air fares as well as overnight hotel accommodation.

"Food costs continue to spike, with prices also rising in shops, cafes and restaurants."

Chancellor of the Exchequer Jeremy Hunt said: "High inflation is a nightmare for family budgets, destroys business investment and leads to strike action, so however tough, we need to stick to our plan to bring it down.

"While any fall in inflation is welcome, we have a plan to go further and halve inflation this year, reduce debt and grow the economy - but it is vital that we take the difficult decisions needed and see the plan through.

"To help families in the meantime, we are providing an average of £3,500 of support for every household over this year and next."

Helen Dickinson, chief executive of the British Retail Consortium, warned that prices would remain high despite the fall in the CPI rate of inflation.

She said pre-Christmas discounts had helped ease inflation in areas such as clothing, furniture and alcohol, but the Ukraine war was maintaining pressure on energy and food prices.

"While there is some indication that inflation may have reached its peak, prices will remain high in the coming months," she said.

"Retailers are determined to support their customers throughout this cost-of-living crisis.

"They are keeping the price of many essentials affordable, expanding their value ranges, raising pay for their own staff and offering discounts for vulnerable groups."