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The rate of inflation may now have peaked but the cost-of-living crisis continues to put pressure on businesses and households, says the Confederation of British Industry (CBI).
December saw the rate of inflation fall to 10.5%, compared to 10.7% in November, according to the latest figures from the Office for National Statistics (ONS).
Petrol and diesel costs eased last month but food prices continued to soar by 16.8%, reaching their highest since 1977. Restaurant and hotel prices also jumped in December, along with a record rise in air fares.
Alpesh Paleja, Lead Economist at the CBI, said: 'These figures add to a growing body of evidence that the UK has passed peak inflation. Over the coming year, inflation should fall further towards single digits as global price pressures ease and an economic downturn takes some of the heat out of price setting.
'Despite this, the cost-of-living crisis will continue to be a very real problem for both households and businesses as price pressures remain high in the short-term. Against the backdrop of a recession, firms will continue to face higher costs and weak demand conditions.
'If the government is going to solve these twin problems, then it needs to continue supporting measures like the Energy Bills Discount Scheme, while enacting a series of pro-growth measures to spur the economy.'
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