Inflation unchanged at 4% in January

The UK’s annual rate of inflation showed no change from December to January, despite food prices falling for the first time since September 2021.

The consumer prices index (CPI) measure of inflation stood at 4% in the 12 months to January 2024, the same rate as in December 2023, the Office for National Statistics (ONS) said.

Higher gas and electricity charges contributed upward pressure following an increase in the energy price cap. The cost of second-hand cars also went up for the first time since May.

“Offsetting these, prices of furniture and household goods decreased by more than a year ago and food prices fell on the month for the first time in over two years,” said Grant Fitzner, chief economist at the ONS.

Food prices declined by 0.4% from December to January, and the annual rate of food inflation eased to 7% — the lowest since April 2022 — from 8% in December.

The fall to 7% means that food inflation has eased for the 10th consecutive month, from a recent high of 19.2% in March 2023, which was the highest annual rate seen for over 45 years.

January’s overall inflation figure is better than expected: the Bank of England had forecast 4.1%. However, it remains well above the central bank’s target rate of 2%.

In response to the data, Chancellor Jeremy Hunt said: “Inflation never falls in a perfect straight line, but the plan is working; we have made huge progress in bringing inflation down from 11%, and the Bank of England forecast that it will fall to around 2% in a matter of months.”