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UK inflation steady at 2.1% in December

British annual consumer price inflation was steady at 2.1% as expected in December, above the Bank of England's target for the third month in a row.

The Office for National Statistics said consumer prices rose 0.6% last month, the biggest monthly gain in a year, keeping the annual rate unchanged from November at 2.1%.

Most economists still expect the UK central bank to cut interest rates next month to shore up a slowing economy.

The biggest upward effect came from food prices, particularly vegetables, where prices rose in December compared with a fall a year earlier, the ONS said.

The biggest downward effect impact came from utility bills, which rose by less than they did the same time last year. However, the ONS said that was likely to change in coming months due recent price hikes by energy providers.

There was also downward pressure on prices from furniture, particularly kitchen units and leather sofas.

The Retail Price Index, on which most pay deals are based, eased to 4% as expected. This could ease pressure on wage demands in the key New Year pay round.