UK inflation rate drops back to 3%

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The UK’s inflation rate, has fallen for the first time since June, mainly due to the impact of air fares.

The inflation rate dipped to 3percent in December, down from November’s rate of 3.1 percent – a six-year high.

The Office for National Statistics (ONS) said that, while air fares rose last month, it had a smaller impact than at the same point in 2016.

The ONS added it was too early to say if this was the start of a longer-term reduction in the rate of inflation.

The Bank of England, has said it thinks inflation peaked at the end of 2017 and will fall back to its target of 2 percent this year.

In November, the Bank’s Monetary Policy Committee (MPC), raised its key interest rate for the first time in more than a decade from 0.25 percent to 0.5 percent.

But Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “The continued weakness of underlying price pressures means that the MPC has little need to rush the next rate hike.”

 

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