UK Inflation Edges up to One-Year High in January as Fuel Price Fall Slows

British annual inflation edged up to a 12-month high last month, offering modest signs that price growth may be climbing off 2015’s record lows, official figures showed on Tuesday.

Consumer price inflation dropped by 0.8 percent on the month, reflecting post-Christmas discounts and a drop in airfares. But the annual rate rose to 0.3 percent, its highest since January 2015, the Office for National Statistics said, and in line with economists’ expectation in a Reuters poll.

British annual inflation has been below the Bank of England’s 2 percent target for two years and last year it was zero, the lowest since comparable records began in 1950.

The BoE said earlier this month that it expected inflation to stay below 1 percent all year and to undershoot its target until 2018, due to the global slump in oil prices, the effect of past rises in sterling and lacklustre wage growth.

The ONS said January’s rise in inflation was caused by smaller falls in food and fuel prices than a year ago, and a modest rise in the price of clothes.


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Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.