Rising U.K. Inflation Puts Pressure on Food Retailers

Higher food and air fares helped to increase December's Consumer Prices Index (CPI), the Office for National Statistics said.

Excluding more more volatile prices such as energy, food, alcohol and tobacco, core inflation also rose to 1.6% from 1.4%, though this was mainly due to the relatively volatile airfares component.

Household energy costs counterbalanced some of those increases, rising a modest 1.4 percent.

Inflation is driving up prices at their fastest rate since 2014.

Air fares and food prices were the main drivers behind the rise in the cost of living, while petrol prices also fell far less sharply than previous year.

The Bank of England governor said the United Kingdom was entering a "period of somewhat higher consumer price inflation", which in turn could damage the United Kingdom economy, given its reliance on consumption.

British inflation jumped higher than expected in December, rising to its highest level in two years.

President Obama To Bid Farewell In Tonight's Speech
Alluding to one of his favored metaphors for the presidency - a relay race - Obama said he was now ready to hand over the baton. Obama will return to his hometown of Chicago and will bid farewell to the nation at the McCormick Place convention.

The December price report showed a modest increase in the overall rate of United States inflation, however the core remained unchanged from its rate over the a year ago. The annual average prices for 2016 rose 0.5 percent year-on-year, slightly above 2015's 0.3 percent. Prices of food also came in quite higher in December on a year-on-year basis.

The retail prices index rate of inflation, which unlike CPI includes housing costs, rose to 2.5 per cent in December, up from 2.2 per cent in November.

"We want to be in a warming trend - it's been chilly for a long time", said Diane Swonk, a Chicago-based economist.

Inflation has spiked to 1.6 per cent fuelled by rising food, petrol prices and air fares. Fed policymakers cited inflation that could accelerate as a result of a low unemployment rate that's likely to push up wages and President-elect Donald Trump's fiscal stimulus plan.

So far the discourse has centred around the impact the weaker Pound would have on the cost of imports.

Inflation will more than double to overshoot the Bank of England's 2% inflation target in 2018, driven up by a falling currency, the central bank said in its quarterly Inflation Report in November.


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