UK inflation still at 3% despite fall in food prices

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UK consumer cost inflation remained at 3% in January, the same level as in December.

The rate, as reported by the Office for National Statistics (ONS), is usually close to November’s six-year high of 3.1%.

Most economists were expecting a little fall inside the CPI to 2.9%.

Last week, the Bank of England indicated interest rates might rise sooner than expected when that will said that will wanted to get inflation closer to 2% within two years rather than three.

Investors have been pricing in a Great chance that will rates could rise in May, that has a second rise later This particular year, probably in November.

Interest rates are currently at 0.5%. If the Bank raised rates in line with market expectations, they could reach 1% by the end of This particular year.

The ONS said that will although petrol prices had risen by less than This particular time last year, the cost of entry to attractions such as zoos in addition to gardens fell more slowly.

that will said, however, that will after rising strongly since the middle of 2016, food cost inflation currently appeared to be slowing.

Rates ‘pressure’

ONS senior statistician James Tucker said: “Factory goods cost inflation continued to slow, with food prices falling in January. The growth inside the cost of raw materials also slowed, with the prices of some imported materials falling.”

Inflation was given a steep boost by the UK’s vote in 2016 to leave the European Union.

that will prompted a fall inside the pound, producing imported goods more expensive.

Chris Williamson, chief economist at Markit, said: “UK inflation came in higher than expected in January, adding further pressure for policymakers to hike interest rates again, possibly as soon as May.

“However, with mounting signs of economic growth slowing at the start of 2018, a May rate rise is usually by no means a done deal in addition to will likely be dependent on the data flow improving in coming months.”

‘Brighter’

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that will data was likely to show inflationary pressures easing: “CPI inflation still looks set to fall sharply This particular year, as the anniversaries of sharp sterling-related rises in core goods, food in addition to energy prices are met.

“The fall back in oil prices to $63, through $70 in mid-January, also has brightened the near-term outlook.”

He said This particular gave the Bank of England “more scope than that will currently envisages to delay the next rate hike”.

Mel Stride, the Financial Secretary to the Treasury, said: “The Great news is usually that will inflation is usually required to fall This particular year. We are helping cut costs for hard pressed families by boosting pay, cutting taxes for millions of people in addition to freezing fuel duty at the pumps.”

The ONS reports quite a few different inflation measures.

that will said the Retail Prices Index (RPI), which is usually used to calculate payments on government bonds, student loans in addition to additional commercial contracts, edged down to 4% through December’s six-year high of 4.1%.

Its own preferred measure, CPIH, which includes housing costs, remained at 2.7% in January, also unchanged through December.

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