UK inflation fell back to 10.1% in the 12 months to January, the Office for National Statistics (ONS) has revealed.

This was down from 10.5% in the year to December 2022 and from a peak of 11.1% last October.

On a monthly basis, the figures also showed that Consumer Prices Index (CPI) inflation fell by 0.6% in January, which compared with a fall of 0.1% in January 2022.

The largest downward contribution to the latest slowing in CPI annual inflation rates between came from transport, the ONS stated, particularly passenger transport and motor fuels. This was followed by restaurants and hotels, while rising prices in alcoholic beverages and tobacco made the largest partially offsetting upward contribution to the change.

The Bank of England (BoE) increased interest rates to 4% at its last Monetary Policy Committee meeting in an attempt to slow the rate of inflation. In its report, the Bank said it is expecting the base rate to peak at 4.5% later this year.

Reacting to the latest headline inflation figure, technical director at Canada Life, Andrew Tully, said:“Despite rising interest rates, inflation remains stubbornly close to the 40-year high, largely driven by energy costs and food prices. Households across the country will continue to feel the financial pain as incomes lag behind.
 
“Today’s numbers will offer little consolation for people on fixed incomes. However, for those past state pension age, a double-digit rise in state pension from April will offer some light at the end of the winter months, although April is also likely to see a further rise in average energy bills.”

Senior financial adviser at Wesleyan, Richard Ollive, added: “It may feel like we’ve turned a corner, but it’s critical to remember that prices aren’t going to start falling – they are going to keep rising, just not as quickly.

“Pressure on budgets will still be painfully tight, especially if people’s pay packets haven’t grown as quickly as their bills. And there is still every chance of another interest rate rise in the near future, which could heap more pressure on finances.”

Share Story: