UK inflation steady at 2.7%

Inflation stayed steady during December, holding firm at 2.7% as falling air fares counteracted the impact of rising household fuel costs.

Leading investors like Sebastian Lyon have voiced their concerns inflation will soon be on the rise, but according to the latest figures, the consumer price index (CPI) is unchanged.

The Office for National Statistics (ONS) said inflation has now been unchanged for three months in a row. Statisticians said that air fares exerted the biggest downward pressure on CPI, while the largest upward pressure came from gas and electricity.

Capital Economics said little change in the level of CPI matched with their own expectations, though the consultancy also pointed out 'encouraging' signs within the ONS' breakdown.

'We already knew that the recent utility price rises would add about 0.3% percentage points to inflation in December. But the good news was that this was broadly offset by a fall in core inflation from 2.6% to 2.4%,' chief UK economist Vicky Redwood said,

This is the first fall in core inflation  since July, and may have been prompted by belt-tightening consumers forcing retailers to discount more heavily than usual.