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Slowing inflation not easing the cost of living crisis

Author: ICAEW Insights

Published: 18 Jan 2023

Official data reveals that UK inflation slowed for the second successive month in December as fuel prices continued to fall.

The inflation figures released on Wednesday 18 January 2023 by the Office for National Statistics (ONS) reported that the Consumer Prices Index (CPI) rose by 10.5% in the 12 months to December 2022, down from 10.7% in November. Core inflation – which strips out volatile items such as food, energy, alcohol, and tobacco – stood at 6.3% in the year to December, unchanged from the previous month.

The easing in the annual inflation rate in December largely reflected easing fuel prices. There were also downward effects from clothing and footwear, and recreation and culture. The largest, partially offsetting, upward effects came from restaurants and hotels, and food and non-alcoholic beverages.

Transport inflation rate

The annual inflation rate for transport was 6.9% in December, down for a sixth consecutive month from a peak of 15.2% in June 2022, and the lowest rate since May 2021. Overall, fuel prices rose by 11.5% in the year to December, down from 17.2% in the year to November. Average petrol prices were unchanged between November and December last year but fell by 8.3p per litre between the same two months of 2022.

Clothing inflation rate

Prices of clothing and footwear rose, overall, by 6.4% in the year to December 2022, down from 7.5% in November. On a monthly basis, prices fell by 0.3% between November and December 2022.

Food and drink inflation rate

Food and non-alcoholic beverage prices rose by 16.9% in the 12 months to December 2022, up from 16.5% in November. The annual rate of inflation for this category has risen for 17 consecutive months, from minus 0.6% in July 2021, and is now at its highest rate since September 1977.

On a monthly basis, UK CPI rose by 0.4% in December, compared with a rise of 0.5% in December 2021. The largest downward contribution came from transport (particularly motor fuels), clothing and footwear, and recreation and culture.

Responding to the latest UK inflation figures, Suren Thiru, Economies Director for ICAEW, said: “Although inflation is on a downward trajectory, it remains far too high to provide any relief to struggling households as the cost of living continues to significantly outpace wage growth.

“The Prime Minister should achieve his pledge to halve inflation this year, but this will owe more to the downward pressure on prices from a flatlining economy and falling energy costs than to any government action.

“While interest rates are expected to rise in February, with inflation slowing, this monetary tightening cycle may end by the summer. If the economy slips into recession, then policymakers may be forced into cutting rates by the end of the year.”

For further information, read the ONS Consumer price inflation.


A closer look at the impact of inflation on people, businesses, accountancy and the wider economy, bringing together the best expert opinion, data and analysis from ICAEW and its members.

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