Finance News

UK inflation rate climbs to 0.6 pct in December 2020

Britain's Consumer Prices Index (CPI) 12-month rate rose to 0.6 percent in December 2020, up from 0.3 percent in November, the British Office for National Statistics (ONS) said Wednesday.

Despite a rise to the reading of 0.6 percent in December, it remained far below than the Bank of England's 2 percent target for inflations.

"ONS data shows UK CPI inflation rate doubled to 0.6 percent in December 2020 (from 0.3 percent in November) but still the 17th successive month of below Bank of England target inflation," said Suren Thiru, head of economics at the British Chambers of Commerce.

Thiru said that the jump in inflation in December was mostly driven by "rising transport costs and clothing & recreation prices."

Meanwhile, the CPI including owner occupiers' housing costs (CPIH) 12-month inflation rate was 0.8 percent in December 2020, up from 0.6 percent in November, said the ONS.

The average house prices in Britain increased by 7.6 percent over the year to November 2020, up from 5.9 percent in October 2020, to stand at a record high of 250,000 pounds (about 341,040 U.S. dollars), which is the highest annual growth rate Britain has seen since June 2016, said the ONS.

"Recent price increases may reflect a range of factors including pent-up demand, some possible changes in housing preferences since the pandemic and a response to the changes made to property transaction taxes across the nations," said the ONS.

Thomas Pugh, an economist at the London-based economic analysis firm Capital Economics, said the CPI inflation growth in December "may represent the first step on a climb towards a peak of about 2.5 percent by the end of the year."

"However, plenty of spare capacity will probably drag inflation back down to 1.5 percent by the end of 2022," Pugh added.

The ONS figures came as Britain reached the grave milestone of 90,000 COVID-19-related deaths Tuesday.

England is currently under the third national lockdown since the outbreak of the pandemic in the country. Similar restriction measures are also in place in Scotland, Wales and Northern Ireland.

To bring life back to normal, countries such as Britain, China, Germany, Russia and the United States have been racing against time to develop coronavirus vaccines. 

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