Investing.com - Consumer price inflation (CPI) in the U.K. increased more than expected in December, official data showed on Tuesday.
In a report, the U.K. Office for National Statistics (ONS) said the rate of consumer price inflation rose from the year before by a seasonally adjusted 1.6% last month, above forecasts for a gain of 1.4% and compared to the 1.2% increase seen in November.
Month-over-month, consumer price inflation rose by 0.5% in December, compared to the prior month’s 0.2% increase and forecasts for a 0.3% gain.
"The main contributors to the increase in the rate were rises in air fares and the price of food, along with prices for motor fuels, which fell by less than they did a year ago," the ONS said in the release.
Still, Bank of England Governor Mark Carney will be expected to write an open letter to the Chancellor of the Exchequer, Philip Hammond, as inflation remains below the central bank's target of 2.0%.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose at a seasonally adjusted rate of 1.6% last monthbeating forecasts for a gain of 1.5% and compared to the 1.4% advance in November.
The retail price index (RPI) increased 2.5% in December, after rising by 2.2% the previous month. Analysts had expected a gain of 2.3%.
Month-on-month, RPI increased by 0.6% in December, compared to a 0.3% gain the prior month. Analysts had expected a 0.4% rise.
Core RPI increased at an annualized rate of 2.7% in December, after rising by 2.5% the previous month. Analysts had expected a gain of 2.5%.
Month-on-month, core RPI increased 0.6% last month, compared to November’s 0.3% advance and expectations for a rise of 0.4%.
The data also showed that the house price index rose 6.7% in December, above forecasts for a gain of 6.3% and following a 6.9% increase a month earlier.
About 10 minutes prior to the release, the inflation information was reportedly leaked, sending cable 1% higher. Following the report, GBP/USD traded at 1.2161 from around 1.2164 ahead of the release of the data, EUR/GBP was at 0.8776 from 0.8771 earlier and GBP/JPY changed hands at 137.53, compared to 137.58 previously.
Meanwhile, European stock markets traded lower. London’s FTSE 100 fell 0.30%, the benchmark Euro Stoxx 50 lost 0.49%, France's CAC 40 traded down 0.45%, while Germany's DAX shed 0.64%.