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 Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam
Craig Erlam

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