LONDON (Reuters) – British inflation unexpectedly slowed to an annual rate of 2.5 percent in December from 2.6 percent in November, official figures showed on Wednesday, and core inflation measures closely monitored by the Bank of England also fell more sharply. .
Economists polled by Reuters had indicated the headline inflation reading at 2.6%.
The Bank of England – which will announce its next interest rate decision on February 6 – predicted in early November that inflation would reach 2.5% in December.
The British pound fell after the figures were published.
Core inflation, which excludes energy, food, alcohol and tobacco prices, fell to 3.2% from 3.5% in November. The Reuters poll indicated a smaller decline to 3.4 percent.
The Office for National Statistics said services inflation reached 4.4% in December, compared to 5.0% the previous month. Economists had expected it to fall to just 4.9%.
The Bank of England views both services and core inflation as better guides to underlying price pressures in the economy, especially those caused by sustained wage growth.
