PwC comments on the CPI figures for December 2024

Commenting on the Office of National Statistics Consumer Price Index for December 2024, Adam Deasy, Economist at PwC, said:

“In a surprise drop, headline CPI came in at 2.5% for December 2024, down from 2.6% in November and 0.1 percentage points below consensus expectations. As in November, transport prices provided the biggest upward contribution, but large price reductions from restaurants and hotels paved the way for a monthly decrease. 

“The story is somewhat reversed from recent months. A significant contributor to elevated inflation fears has been services; the CPI services annual rate falling from 5.0% in November to 4.4% in December, representing the lowest level since March 2022, while goods inflation has ticked up in the month.

“The fall in consumer price inflation could not come at a better time for both the Bank of England and No. 10. With UK growth momentum slowing further at the end of the year, the news that services inflation has finally cooled will be welcomed.UK bonds suffered in the recent market sell off, so any indication that inflation was continuing to run hot would have put pressure on the Government to take action. Some pressures remain, particularly in light of the Autumn budget, but this may be the green light the MPC needs to resume the rate cutting cycle.”

ENDS