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Surprise rise in inflation as uncertainty remains

UK inflation rose unexpectedly from 3.9% to 4% in December due to tobacco and alcohol prices increasing, according to new figures from the Office for National Statistics.

Tobacco and alcohol prices were up 12.9% in December compared to the month before, with the former rising due to recent tax hikes on the product.

David Bharier, Head of Research at the British Chambers of Commerce, said: “Consumer price inflation remains stubborn with a slightly higher than expected growth rate of 4% in December 2023, and no change in core inflation at 5.1%. However, producer prices continued to fall by 2.8%.

“For consumers, prices continue to rise from a very high base. The current global picture means the path ahead is now more uncertain. One of the core reasons for the last two years of inflation was supply chain collapse due to COVID-19 lockdowns, and current disruption in the Red Sea has already seen a spike in leading indicators such as shipping container and insurance costs.

“Our surveys show while inflation has been diminishing as a concern for businesses, it remains top of the list, particularly for sectors more exposed to economic shocks like hospitality and retail. Coupled with trade barriers with the EU and ongoing worker shortages, trading conditions remain tough.

“Businesses are increasingly desperate for a clear, long-term strategy which delivers on infrastructure, trade, skills and green innovation to grow the economy.”

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