14 February: Bank Will Seek Better News Before Acting
UK inflation was 4% in the year to January, unchanged on December 2023, writes Andrew Michael.
While this was lower than market expectations of an increase to 4.2%, it still reduces the likelihood of an interest rate cut by the Bank of England before the summer.
Today’s Consumer Prices Index (CPI) from the Office for National Statistics shows that prices fell by 0.6% in January itself, the same rate as January 2023.
Core CPI, which leaves out volatile data relating to energy, food, alcohol, and tobacco, rose by 5.1% in the year to January 2024, compared with a figure of 5.2% recorded a month earlier.
CPI including owner-occupiers’ costs (CPIH) rose by 4.2% in the 12 months to January 2024, the same rate as a month earlier. On a monthly basis, CPIH fell by 0.4% in January, the same rate as January last year.
The ONS said the largest contribution to the monthly change in both the CPI and CPIH rates came from housing and household services, mainly through higher gas and electricity charges (the energy price cap rose by 5% on 1 January). These were offset by falls in the cost of furniture and household goods, food, and non-alcoholic drinks.
Grant Fitzner, ONS chief economist, said: “Inflation was unchanged in January, reflecting counteracting effects within the basket of goods and services.
“The price of gas and electricity rose at a higher rate than this time last year due…
