UK Inflation Remains Steady at 4.0% in January

Topic: Technology
Publication Type: Articles
UK Inflation Remains Steady at 4.0% in January

In January, inflation in the United Kingdom remained unchanged at 4% according to official data released on Wednesday. Lower food prices balanced out the rise in energy costs, providing relief for both the Bank of England (BoE) and Prime Minister Rishi Sunak ahead of an anticipated national election later this year. (Source: ONS)

On a month-on-month basis, the headline consumer price index dropped to -0.6%, reverting to negative territory after December's unexpected rise of 0.4% compared to the previous month and a 4% increase annually. (Source: ONS)

In the 12 months leading up to January 2024, the Consumer Prices Index including owner occupiers' housing costs (CPIH) increased by 4.2%, maintaining the same rate as seen in December 2023, and marking a decline from its recent peak of 9.6% in October 2022. (Source: ONS)

The Office for National Statistics stated on 14th February that the primary driver for the monthly change in both CPIH and CPI annual rates was the housing and household services category, primarily due to increased gas and electricity charges. Conversely, the largest decrease was attributed to the categories of furniture and household goods, as well as food and non-alcoholic beverages. (Source: ONS)

The core Consumer Price Index (CPI), a closely monitored measure that excludes volatile food, energy, alcohol, and tobacco prices, recorded an annual increase of 5.1%, slightly lower than the consensus estimate of 5.2%. On a monthly basis, the core CPI declined to -0.9%, falling below the forecast of -0.8%. (Source: ONS)

U.K. Finance Minister Jeremy Hunt in a statement stated that "Inflation doesn't decline in a perfectly linear manner, but our strategy is yielding results; we've made significant strides in reducing inflation from 11%, and the Bank of England anticipates it will reach around 2% in the coming months."

The annual rate of CPI goods decelerated from 1.9% to 1.8%, indicating a slight slowdown. However, pressure on prices persisted in the services industry, as the annual rate of CPI services increased from 6.4% to 6.5%. (Source: ONS)

The stable annual rate observed between December 2023 and January 2024 was due to a decrease in prices by 0.4% on a monthly basis, mirroring the rate seen between December and January of the previous year. (Source: ONS)

In the 12 months leading up to January 2024, the owner occupiers' housing costs (OOH) component of CPIH increased by 5.4%, compared to 5.3% in December 2023. OOH costs experienced a monthly increase of 0.4%, consistent with the rate observed between December and January of the prior year. (Source: ONS)

Services inflation, often considered an indicator of domestic price pressures, increased slightly to 6.5% from 6.4% in December, although it did not reach the level anticipated by the Bank of England (BoE). (Source: ONS)

The BoE is concerned that rapid wage growth, which contributes significantly to the inflation rate in the services sector, could further exacerbate inflationary pressures throughout the economy. (Source: ONS)

Recent data published on Tuesday revealed that regular wages grew by an annual rate of 6.2% in the final quarter of 2023, marking the slowest increase in over a year. However, this rate is approximately double the pace that the BoE deems consistent with achieving sustainable inflation at 2%. (Source: ONS)

Recent developments suggest that inflation will continue to trend downward. Factors such as decreasing energy, food, and producer prices, along with declining vacancies and easing wage pressures, are providing positive indications for the Bank of England. These developments suggest that tighter financing conditions are moderating labor demand, contributing to the overall decrease in inflation. (Source: ONS)

The Bank of England has successfully reduced inflation from a four-decade high of over 11% by aggressively raising its main interest rate from near zero to 5.25%. Since August, the rate has remained stable, sparking hopes that cuts may soon be considered. (Source:

Inflation was initially fueled by supply chain disruptions during the coronavirus pandemic and exacerbated by Russia's full-scale invasion of Ukraine, which drove up food and energy costs. (Source:

While the interest rate hikes have aided in the fight against inflation, the impact on consumer spending, particularly through higher mortgage rates, has exerted pressure on the British economy, which is experiencing minimal growth. (Source:

Regardless of future developments in interest rates, it is anticipated that relatively elevated borrowing costs and subdued economic growth will set the stage for the upcoming general election, scheduled within a year. This poses a challenge for the governing Conservative Party, which is trailing significantly behind the main opposition Labour Party in opinion polls leading up to the vote. According to various economists. (Source:



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