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British inflation eased last month after hitting a 41-year high in October, offering some comfort to the Bank of England, but the pressure on households remained intense as food and drink prices rose at the fastest pace since 1977. Annual consumer price inflation fell to 10.5% in December from November’s 10.7%, the Office for National Statistics said on Wednesday (January 18), a drop in line with economists’ forecasts in a Reuters poll.

However, while lower prices for petrol and clothing pushed down the headline rate, the cost of food and non-alcoholic beverages was 16.8% higher than a year earlier, the sharpest increase since September 1977, led by eggs, milk and cheese. Finance minister Jeremy Hunt said on Wednesday (18 January) after the figures were released that high inflation was a huge worry for families, in particular when it came to shopping for food. Britain’s economy is set to contract this year as inflation squeezes disposable incomes, and the BoE forecasts unemployment will rise, factors which some BoE policymakers have said mean little or no more tightening is likely to be needed.



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