UK inflation soared to a 30-year high in December — and economists say it's going higher

markets.businessinsider.com:

Tolga Akmen/Getty Images

UK inflation shot up to a 30-year high of 5.4% in December, data showed Wednesday, driving up the cost of living and adding to expectations that the Bank of England will hike interest rates again.

Many economists predict that prices will continue to march higher in the coming months, with the BoE expecting inflation to soar to 6% in the spring.

The 5.4% consumer price index inflation figure for December was the highest since 1992, the Office for National Statistics said. It indicated that the prices of UK goods and services were on average 5.4% more expensive in December than they were a year earlier.

It surprised analysts, who had been expecting an increase to 5.2%. And it was a big jump from November's 5.1% reading.

«Food prices again grew strongly, while increases in furniture and clothing also pushed up annual inflation,» said Grant Fitzner, chief economist at the ONS.

«These large rises were slightly offset by petrol prices, which despite being at record levels were stable this month, but rose this time last year.»

On a monthly basis, CPI inflation stood at 0.5% in December, down from 0.7% in November.

Core CPI, which removes energy, food and other volatile items, rose to 4.2%, also the highest reading in 30 years.

The pound was roughly flat against the dollar at $1.34 shortly after the data was released. London's FTSE 100 stock index was down 0.18%.

Read more: A 30-year market vet shares 5 indicators that show stocks are in dangerous territory as the Fed tightens and economic growth gets set to slow — all while valuations sit at historic highs

«Inflation is likely to remain close to current rates in Q1 2022 before rising again in April,» said Martin Beck, chief economic advisor to the EY Item Club.

B