LONDON (Reuters) – British inflation unexpectedly slowed to an annual rate of 2.5% in December from 2.6% in November, and core measures of inflation closely watched by the Bank of England fell more sharply, official data showed on Wednesday.
Economists polled by Reuters pointed to overall inflation of 2.6 percent.
The BoE – which will announce its next interest rate decision on February 6 – forecast in early November that December inflation would be 2.5%.
Sterling fell after the figures were released.
Core inflation, which excludes energy, food, alcohol and tobacco prices, fell to 3.2 percent from 3.5 percent in November. A Reuters poll indicated a smaller decline to 3.4 percent.
Inflation in services was 4.4% in December compared with 5.0% a month earlier, the ONS said. Economists had predicted that it would fall to just 4.9%.
The BoE views both services and core inflation as a better guide to underlying price pressures in the economy, particularly those caused by sustained wage growth.
