British inflation rate hits two-year high at 1.6%

British consumer prices showed solid growth in December, due to the weak Sterling, official figures revealed on Tuesday.  According to the Office for National Statistics, the Consumer Price Index rose 0.5% to 1.6% year-over-year in December, compared to the preceding month's 1.2%, above market estimates of 1.4% hike. It was the strongest expansion since 2014.  Furthermore, the ONS said factory gate prices increased 2.7% from Novembers' 2.4%, though slower than expected. In the meantime, input prices jumped 15.8% on a yearly basis, after rising 13.3% in the previous month, whereas economists penciled in an increase of 15.5%. In addition, the report said, the so-called core CPI, which excludes prices for volatile items such as energy and food, rose to 1.6% from 1.4% in the reported month, in line with analysts' expectations, while the Retail Price Index came in at 2.5%, compared with 2.2% previously. The surge in British consumer price inflation was mainly driven by rising prices for airfares, gasoline, clothing and food. The slide in the value of the Pound boosted costs for British companies. According to the latest forecasts, the further rise in UK inflation is likely to force the Bank of England to tighten its monetary policy and the annual rate is expected to exceed 2% in the next six months, driven by higher import costs.