Data published by the Office for National Statistics (ONS) showed that consumer prices rose by 10.1% per annum in January after rising by 10.5% per annum in December. It marks a third consecutive month of slowing inflation and the lowest rate since September 2022. Economists had expected CPI growth of 10.3% per annum. The largest downward contribution came from transport (particularly passenger transport and motor fuels), and restaurants and hotels, with rising prices in alcoholic beverages and tobacco making the largest partially offsetting upward contribution to the change. Meanwhile, core CPI - which excludes energy, food, alcohol and tobacco - rose 5.8% per annum after rising 6.3% per annum in December. This was the weakest growth since June 2022. Consensus estimates suggested an increase by 6.2% per annum.
On a monthly basis, the consumer price index fell by 0.6%, offsetting a 0.4% increase in December. Economists had expected a 0.4% decline in prices in January.
The ONS said that the consumer prices index including owner occupiers' housing costs (CPIH) rose by 8.8% per annum in January, down from 9.2% in December. On a monthly basis, CPIH fell by 0.4% in January, but was little changed in January 2022.
The Bank is forecasting that the consumer price index will fall to about 4% by the end of the year – but that is based on a lack of additional shocks for the UK and wider global economy.