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17 Feb 2021 | 07:30

UK inflation ticks higher in January as food prices rise

(Sharecast News) - UK inflation ticked higher in January amid a rise in the price of food and household goods, according to figures released on Wednesday by the Office for National Statistics. Consumer price inflation rose to 0.7% in January from 0.6% in December, versus expectations of 0.5%.

Meanwhile, core inflation - which strips out volatile food and energy prices - held steady at 1.4%, versus consensus expectations of 1.3%.

ONS deputy national statistician for Economic Statistics, Jonathan Athow, said: "Inflation rose slightly in January, with food prices increasing. Household goods also pushed up prices with less discounting this year on items such as bedding and settees.

"However, there were widespread January sales, with particular price cuts for clothing and footwear."

Paul Dales, chief UK economist at Capital Economics, said the rise in CPI inflation is trivial given that a jump to around 2.0% in April and to around 2.5% by the end of the year appears to be "baked in the cake".

"That would knock on the head any lingering hopes of more stimulus from the Bank of England, although we doubt it will prompt tighter monetary policy either," he said.

"The rise in January is a bit of a sideshow to the probable leap in inflation to around 2.0% in April due to last year's plunge in fuel prices dropping out of the annual comparison, the temporary hospitality VAT cut being reversed and the 9.2% rise in Ofgem's utility price cap.

"The unwinding of the downward effects of last August's EOHO restaurant scheme will push it higher still in August. By December, CPI inflation may be around 2.5%."
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