According to the report from the Office for National Statistics (ONS), in January consumer prices rose by 4.0% per year after a similar increase in December. Economists had expected inflation to accelerate to 4.2%. Economists will be watching keenly for signs on what impact the figures could have on the Bank of England's base interest rate, which is causing pain for borrowers and homeowners struggling with higher mortgage rates. The next Bank of England decision is on March 21. The day before this decision, another data on the consumer price index will be published.
The largest upward contribution to the CPI annual rates came from housing and household services (principally higher gas and electricity charges), while the largest downward contribution came from furniture and household goods, and food and non-alcoholic beverages.
Meanwhile, core CPI - which excludes energy, food, alcohol and tobacco - rose by 5.1% per annum (the lowest rate since January 2022) after a similar increase in December. Consensus estimates suggested an increase by 5.2% per annum. On a monthly basis, core consumer prices fell 0.9%, compared with the 0.6% increase in December and the market estimate of a 0.8% decrease.
The data also showed that on a monthly basis, the consumer price index fell by 0.6%, offsetting the December increase (+0.4%). Economists expected a 0.3% drop.