(Reuters) – Inflation in the United Kingdom remained at 4.0% year-on-year in January, a rate lower than expected, data published on Wednesday by the Office for National Statistics (ONS) showed.
Economists polled by Reuters on average forecast a rebound to 4.2% after 4.0% in December.
“Overall, the latest inflation data will encourage the Bank of England (BoE) to consider when it is appropriate to cut rates,” notes Martin Beck, senior economic advisor at the EY ITEM Club.
Excluding energy and food, the rise in consumer prices stood at 5.1% last month, as in December. The Reuters consensus was 5.2%.
On a monthly basis, headline inflation stood at -0.6% and core inflation at -0.9%, compared to forecasts of -0.3% and -0.8% respectively.
Inflation in the services sector, an indicator closely monitored by the BoE, rose to 6.4% from 6.5% in December, although below the central bank’s forecasts.
The BoE fears that rapid growth in wages, which account for a large part of the services sector’s costs, could increase inflationary pressures across the economy.
“Inflation never falls in a straight line, but the plan is working. We have made huge progress in bringing inflation down from as high as 11%, and the Bank of England predicts it will fall to around 2% in a few months,” Finance Minister Jeremy Hunt said.
(Written by Suban Abdulla, Corentin Chappron, edited by Kate Entringer)
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