Inflation plunges to 1.8 per cent as lower energy and fuel prices drags the rate below Bank of England target for the first time in two years
- Inflation in January was 1.8 per cent, beating forecasts of 2 per cent price rises
- It is the lowest rate since January 2017 and is below the pace of wage increases
- The Bank of England has a target to keep inflation at 2 per cent each year
Inflation plunged to 1.8 per cent in January the lowest rate for two years, official statistics revealed today.
It is the first time since January 2017 the pace of price rises is below the official Bank of England target of 2 per cent.
It is also a further boost for workers as wages are continuing to increase at more than 3.3 per cent, the latest figures revealed last week.
Inflation was dragged down by lower energy and fuel prices. Figures from the Office for National Statistics (ONS) show the Consumer Prices Index (CPI) fell from 2.1 per cent in December.
Inflation (blue line) plunged to 1.8 per cent in January the lowest rate for two years, official statistics revealed today. It is also a further boost for workers as wages (red line) are continuing to increase at more than 3.3 per cent, the latest figures revealed last week
January inflation missed economists’ expectations and the central bank’s target of 2 per cent. Sterling held firm after the news, at 1.289 US dollars and 1.138 euros.
Inflation was pulled lower by a decline in electricity, gas and other fuel prices between December and January, which was partially offset by lower air fares.
The main driver for inflation was the new energy price cap on standard variable tariffs recently introduced by energy watchdog Ofgem.
Mike Hardie, head of inflation at the ONS, said: ‘The fall in inflation is due mainly to cheaper gas, electricity and petrol, partly offset by rising ferry ticket prices and air fares falling more slowly than this time last year.
‘House prices continued to grow, albeit at the lowest UK annual rate since July 2013 with growth in the North East and London lagging behind Northern Ireland, Wales and the West Midlands.’
Inflation was dragged down by lower energy and fuel prices (file image). Figures from the Office for National Statistics show the Consumer Prices Index fell from 2.1 per cent in December
At the pumps, motorists had lower fuel costs last month, with petrol down by 2.1p per litre on the month to 119.6p. Diesel also fell by 2.4p to 129.5p.
Clothing and footwear prices had a small downward pull on inflation with prices falling by 1.3 per cent for the year to January.
The Retail Prices Index (RPI), a separate measure of inflation, was 2.5 per cent, down from 2.7 per cent in December.
The CPI including owner-occupiers’ housing costs (CPIH) – the ONS’s preferred measure of inflation – was 1.8 per cent in January, down from 2 per cent in December.