The stronger 0.3% m/m gain in core consumer prices in December provided clearer evidence that the forces weighing on core inflation last year are now firmly in reverse. Admittedly, core CPI inflation only edged up to 1.8% in December and will remain subdued for the next couple of months. But the three-month annualised inflation rate has already jumped back to 2.5% and, once the earlier sharp falls drop out of the annual comparison, we expect the core inflation rate to snap back above 2% in the spring.
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