Latest UK inflation data – December 2016

CPI inflation rose today to 1.6% (RPI 2.5%) – their highest rates in over two years. There are two key forces behind this as we’ve noted before:
– petrol prices have been increasing and are significantly higher than a year ago
– food prices have started to increase.

The apparent increase in December to 1.6% is probably slightly ahead of the true rate (1.5%?) due to ONS recording markedly higher air fares in December. ONS consistently struggle to measure them and they are subject to a high degree of volatility – this time probably exaggerating CPI.

The full ONS data can be found here.

Freddo

There has been much in the media again recently of the impact of Brexit on UK prices. This time it is the proposed 20% price increase of the children’s chocolate bar Freddo from 25p to 30p – see here. The manufacturers say the rise is due to the increased commodity price of cocoa. There is certainly an element of truth in this and I suspect when the decision to increase its price was taken – possibly early last autumn – sterling cocoa prices were at a three year high, in part because the Brexit devaluation.

shareradioHowever much has happened since then and because of good harvests in West Africa, cocoa prices have plummeted 30% even in sterling terms since their peaks last summer. Therefore the recent rise in Freddo’s price is possibly more questionable in this light. Listen to my discussion about it on Share Radio here:

Inflation expert Pete Comley explains soaring Freddo prices

/podcasts/inflation-expert-pete-comley-explains-soaring-fre . . .

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