Shoppers walking along Oxford Street in London on Dec. 21, 2021.

Tolga Akmen | AFP | Getty Images

LONDON — The U.K. inflation rate soared to a 30-year high in December as higher energy costs, resurgent demand and supply chain issues continued to drive up consumer prices.

Inflation hit an annual 5.4%, its highest since March 1992 and up from 5.1% in November, itself a decade high. Economists polled by Reuters had expected an increase of 5.2%.

On a monthly basis, consumer prices rose 0.5%, outstripping economist projections for a 0.3% climb.

The surging cost of living is raising expectations that the Bank of England will look to hike interest rates again. In December, the BOE became the first major central bank to begin lifting borrowing costs from their pandemic-era lows.

Markets will be closely watching the Monetary Policy Committee’s next meeting on Feb. 3, with policymakers mulling another rate increase following the 15 basis point hike to 0.25% in December.

The Bank is also operating against the backdrop of a remarkably tight labor market, with vacancies tracking at a record high and employment remaining below its pre-pandemic level.

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