According to the Office for National Statistics (ONS), on a monthly basis CPI fell by 0.6 per cent in January against 0.1 per cent the previous year.
The CPI including owner occupiers’ housing costs (CPIH) rose by 8.8 per cent in the 12 months to January 2023, down from 9.2 per cent in December 2022.
The largest upward contributions to the annual CPIH inflation rate came from housing and household services (mainly from electricity, gas, and other fuels), and food and non-alcoholic beverages.
The largest downward contribution to the change in both the CPIH and CPI annual inflation rates between December 2022 and January 2023 came from transport (particularly passenger transport and motor fuels), and restaurants and hotels.
March base rate move uncertainty increases
Simon Webb, managing director of capital markets and finance at LiveMore, said: “Although inflation fell slightly in January by 0.4 per cent, it is still in double-digit figures at 10.1 per cent. This creates uncertainty as to whether the Bank base rate will stay at four per cent when the Monetary Policy Committee meets next on March 23.”
“The next inflation figures are due the day before the MPC’s announcement in March so if inflation falls further, it may see reasons not to raise the base rate. Two of the MPC members at the last meeting voted against an increase so there is likely to be substantial debate around whether to lift base rate and if so by how much. Intense focus will remain on economic data that emerges over the coming weeks and months.”
Adam Oldfield, Phoebus Software’s chief revenue officer, said: “All in all, the UK economy seems to be defying predictions with GDP up and now inflation easing more quickly than many had thought. Although the percentages are small it is a step in the right direction.
“Nonetheless, we heard only yesterday that real wages are struggling to keep up with inflation, so we have a way to go before that situation changes and people start to feel like they are in pocket rather than out.”
