UK inflation speed up in December, outlook remains weak

UK inflation sped up as expected between November and December while core inflation, which is stripped of price changes in energy, food and alcohol, rose above expectations to 1.4%; its highest rate in more than a year.

A hefty rise of 46% in air fares between November and December was the main upward push on the annual CPI rate. Falls in the price of food, alcoholic and tobacco were the main downward forces. A separate ONS release showed UK house prices were up 7.7% in November, up from 7% in the year to October.

Following its latest meeting the BoE sees CPI rising "modestly further in the coming months," based on some of the greater drops in energy and food costs a year earlier, dropping out of the annual comparison.

Barclays has revised down the CPI inflation from 1.4% to 0.9% for 2016 and 1.7% yoy for 2017.