From Morningstar:

UK consumer prices unexpectedly rose by 4.0% in December, an increase from 3.9% in November. The reading was higher than market expectations of 3.8%, making the timing of expected interest rate cuts from the Bank of England uncertain. Core consumer prices, which exclude some items, also rose by 5.1% annually.

In both the Eurozone and United States, inflation is on an upward trend, complicating the decision of when to cut rates for the Bank of England. The Bank had previously indicated that it would need to keep monetary policy restrictive in order to sustainably return inflation to the 2% target.

There is a difference in opinion about when Bank of England will cut rates in 2024.Investment banks’ forecasts range from February to March. There are various factors being considered in the inflation calculations and not all data reflects the current situation.

UK economy is on the verge of a possible recession and inflation continues to rise. Expect no rate cuts from the Bank of England next month. Services and wage inflation are proving critical in driving inflation upwards, adding pressure on the Bank of England to cut rates.

The slight increase in the monthly headline rate of CPI may be a result of retailers increasing prices post-Black Friday sales. However, the general trend indicates that the economy will start to flourish again in the coming months. There are a variety of factors at play, globally, which could have a significant impact on the markets.



Read more: UK Inflation Data Puts Early Rate Cuts in Doubt