Consumer price inflation hits a 5-year low of 3.17% in January

According to data from the Office for National Statistics January’s rise was the biggest since June 2014.

Retail inflation in the country as tracked through the Consumer Price Index eased to 3.17 per cent in January, 2017, which is lowest in the past five years.

Economists at the Bank of England had forecast inflation to hit 1.9% for the month of January.

Core CPI, which excluded more volatile prices, rose 1.6% for the second month in a row, again a little short of the expected 1.7%. As noted in a report, lead economist on the team Yang Zhao said they “believe CPI inflation is very likely to moderate to below 2.0% in February”.

United Kingdom inflation is creeping ever closer to the Bank of England’s (BoE) 2 per cent target reaching a 30-month high of 1.8 per cent in January.

Inflation has reached its highest rate for two-and-a-half years, mainly as a result of the rising price of fuel.

Analyst Ipek Ozkardeskaya at London Capital Group said the rising inflationary pressures were somewhat worrisome.

The inflation figures were accompanied by other data showing manufacturers’ fuel and material costs, known as input prices, jumped 20.5% year-on-year in January.

Month-on-month, the HICP slid 0.8 percent at the start of the year, reversing a 1.0 percent increase in December.

Global recovery in manufacturing is eventually boosting prices of crude oil and iron ore. Retail inflation was at 3.41 per cent in December.

A Treasury spokesman said: ‘Employment has reached record levels and earnings have risen faster than inflation for more than two years.

The MPC voted unanimously to keep rates on hold at 0.25 per cent this month.

Ballooning import prices triggered by the Brexit-hit pound are also expected to bump up prices as companies pass on their soaring costs to consumers.

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Last week BoE rate-setter Kristin Forbes said she was beginning to become uncomfortable with the central bank’s commitment to a neutral policy stance, arguing instead that interest rates could need to rise soon if price pressures continue to build.