The CPI index fell 0.5% in January compared to December. Food prices also fell 0.5% over the same time period, despite the bad weather effects on vegetables.
Core inflation over the last twelve months stayed at the same level as in December, at 1.6%.
Overall the CPI rose by 1.8% over the last twelve months. This was a higher annual rate than December owing to the fall out of a very good month a year ago. The main factor, accounting for half the annual increase came from higher oil prices affecting transport. The UK inflation rate is mirroring the German and US rates, affected by the same world oil price rise. The other most buoyant item was the increase over the last year in restaurant and hotel bills, reflecting higher wages.
January’s figures were helped by falls in clothing and footwear prices, and by the intense supermarket competition which kept food prices down.
February 14, 2017
If it gets much higher Mr Carney is surely going to have to write a letter to the Chancellor.
Shame Mr Carney panicked and reduced interest rates just after the referendum, meaning the Banks automatically reduced depositors rates by much more than the Bank rate cut, to once again increase their margins, but to also reduce the depositors ability to keep up with inflation at the same time.
February 14, 2017
The last one he wrote was in December, explaining why inflation was too low.
http://www.bankofengland.co.uk/monetarypolicy/Documents/pdf/cpiletter151216.pdf
Whereupon Hammond sent one of the usual “Never mind, just carry on” replies:
http://www.bankofengland.co.uk/monetarypolicy/Documents/pdf/chancellorletter151216.pdf
February 14, 2017
The economy is in ‘not too bad’ condition, there is growing enthusiasm for leaving the EU, there are hopeful new trade deals to encourage the export market, and most of all – the opposition parties are in disarray. Would this not be an excellent time to call a general election, following issue of our notice to quite the ‘evil federation’?
February 14, 2017
Indeed, at least it would clear out Ken Clark and hopefully Osborne. I cannot see T May getting us cleanly out of the EU, in two years time, shortly before an election. Not with the current make up of MPS,even if she is trying too, which is far from clear.
February 14, 2017
The economy could be in a wonderful condition (rather than a “not too bad one”) had we some real Conservatives, living at Nos. 10 and 11 Downing Street. People who believed in far less government, lower, taxes, far less red tape and market rigging, far fewer vanity projects and some cheap on demand energy.
But T May seems to believe the complete opposite and P Hammond seems more concerned with putting taxes up even further, devaluing the currency and with stopping people hacking into internet connections to control people’s kettles, rather bizarrely. No vision at all just as daft as Major, Cameron and Osborne, more potty socialists in the wrong party and even leading it.
February 14, 2017
I agree, the chance is too good to miss. Labour could be buried. There is a real risk of Corbyn being booted out by 2020. He may be replaced by someone equally left wing and unelectable but there’s no guarantee.
February 14, 2017
The target is still that set by Gordon Brown, 2% a year on the CPI measure.
Irrespective of whether that target is too high or too low or there should be no target at all, it’s not so long ago that a great fuss was being made about inflation being too low with a risk that the economy would enter a deflationary spiral – hence the official pretext for the large scale money printing.
Now the great fuss is about inflation soaring, or being about to soar, or could perhaps soar later, as one of the many bad consequences of the decision to leave the EU.
It should all be taken with a very large pinch of salt – Keep Calm and Carry On.
February 14, 2017
The “independent” BOE was one of several miscalculations of the real financial world. At the time a fixed link to say 10yr Gilts was a much better risk and have felt that ever since. It is time this letter nonsense was stopped, a bit like the yellow card in football, largely meaningless.
February 14, 2017
Spring looks just around the corner ; with the snowdrops in full bloom it is a welcome sign that the economy is in relatively good shape . Tell that to the ” remainers “. Heartfelt greetings to all the ladies on Valentine’s Day .
February 14, 2017
Maybe if they put housing costs into inflation and other things instead of just a basket of goods which they pick out, we might then see the real inflation instead of just artificial inflation which they choose to report, everything with all government is all smoker and mirrors, you never get the truth.
February 14, 2017
Agree with you there Ian. We have found that within 18 months house prices in Hampshire/Dorset have risen so much that we now cannot afford to move back there from Scotland. We have missed the boat so to speak. The way house prices are rising in the South makes it almost impossible for normal people to keep up with them.
February 14, 2017
Not wishing to add more angst to your predicament but I suspect if the SNP continue to take over from the Libdems as the daft party the differentials could worsen.
February 14, 2017
We change over to CPIH this March. That is, CPI with added OOH. CPIH rose by 2.0% in the year to January 2017, compared with a 1.7% rise in the year to December 2016. CPIH includes Owner Occupiers’ Housing (OOH) costs and Council Tax.
February 14, 2017
Much truth in that. The main cost of living for most people is the costs of bloated government.
Plus all the endless inconvenience they cause on top of the tax.
February 14, 2017
There is no point in keeping money in banks except perhaps as working capital to run a business. Money is better employed as investment in assets such as property, so long as demand exceeds supply.
February 14, 2017
The inflation target set is 2%. It has not reached that yet but the likes of the BBC see 1.8% as the coming of Armageddon. Lefty progressives are shameless in their blatant twisting of the narrative to support their socialist ideology. These days anything that does not further the socialist cause like Brexit, Trump and free market capitalism is vilified by the left. Using means that can only be described as nasty, hypocritical and fact less all for the purpose of distorting the truth in their favour. These people aim to rule/govern us and as we have already found out where they already do or have it does not turn out well.
February 14, 2017
Good afternoon.
House and rental inflation will, however, continue to outstrip wages. Also, I have recently read that costs for building materials is rising and this will feed into the housing market further exasperating matters for all concerned.
I fear a breaking point in the housing market is about to be reached similar to those experienced by Dubai. A sudden and brutal correction !
And already the governments tax take from Stamp Duty is down and if the housing market does contract, then there will be even less monies for all those goodies a Socialist Tory party to spend to try and be popular with the electorate.
February 14, 2017
It looks like you’re comparing the rate of change in inflation between two months, which is a curious thing to do. The Jan 15 – Jan 16 inflation rate was 1.8%. The Dec-Dec rate was 1.6%. As for causes… It generally takes external influences 6 months to show up in inflation, and 18 months for them to be fully apparent. Essentially we have another 12 months of inflation caused by the currency devaluation.
Reply I was precise and accurate. There is no evidence of inflation from lower sterling – the annual inflation came mainly from the higher oil price, and from some wage inflation in hotels and restaurants. Do try to read the underlying data. In January prices fell.
February 14, 2017
Simom Ro, there is an expression in the entertainment world called “jumping the shark”. The point where a TV series totally looses the plot and comes to a ridiculous fantasy end.
That is, a programme series that is believed to be well past its peak in quality or relevance. The idiom “jumping the shark” is almost always used in a pejorative sense.
Leading Brexiteers are starting to realize, that this is exactly where they are.
February 15, 2017
“I was precise and accurate.” Yes, and misleading, as usual. The Little Englanders whined for years that QE was going to cause inflation and lo and behold, it’s the Little Englanders themselves that have caused inflation, by sinking the pound. When is Mr Redwood going to apologise to the people of the UK for making us all poorer? Well, never, since the Little Englanders never admit to being wrong about anything. No Profile in Courage award for Mr Redwood.
Reply QE did create a big asset price inflation – have you seen the price of bonds and properties recently? Brexit did not cause the main part of the fall of sterling, which happened between July 2015 and April 2016 before the City thought Brexit could win any referendum. Try reading what I write instead of making up a different version.
February 14, 2017
Yes there was a bad effect on vegetables…produced in Spain! It appears our retail sector believes Spain ( cheap )and Morocco ( expensive ) have the ability to grow lettuce. North and South America regularly plough such veg back into the earth as no-one is buying it.
February 14, 2017
Listening to the news on BBC Radio 4 today at 1 pm all was doom and gloom: inflation the highest for years; 20% fall in the pound pushing up prices of cars, computers, washing machines etc; inflation set to rise further; people reluctant to fill up with petrol and motoring less because of price rises. Manufacturers are desperately struggling to hold price rises at 3% despite a 20% increase in costs of raw materials. On and on and on. Apart from a brief reference to oil prices affecting other countries all the bad news was attributed to Brexit. If I had not just read JR’s comments above only minutes before switching on I would have felt worried and anxious. As I have said before, I was a reluctant remainer, now committed to Brexit and keen to see it work; confidence is an important part of this but I fear the negativity and hostility of the BBC will be very damaging.
February 14, 2017
Anna, what they don’t say is that raw materials in most cases are a relatively small percentage of the “factory gate” price.
So, you don’t expect the final retail price to go up by 20%…
February 14, 2017
Low interest rates also keeping cost pressures, and therefore prices, down.
February 14, 2017
Our media has moved on from statistics.Forced into admitting their sources’ error.
Hysteria at the highest levels! Their outbursts do not make sense to the normal mind.
Online social media”Right-wing” satirists are collecting half a million to a million subscribers on You Tube so too on Twitter . Publishers are urging them to bring forward their first new books.
I have not witnessed this turnabout in my whole life. It was always the Lefty Liberals who muppeted and private-eyed our society. Now they are the targets and how funny weirdly pompous they are. Last century’s freshly ground pepper, ( organic of course ).
February 14, 2017
I was alarmed!
I thought the economy was wrecked, the sky was going to fall in, and the Earth was in terminal decline. Then I realised I had pressed the wrong button, and I was listening to the BBC.
Tad
February 14, 2017
” and the post-Brexit vote pound weakness” according to the Telegraph
February 14, 2017
Carney made a serious mistake I think when he pushed more funny money into the economy and halved the interest rate. It was inflationary and it will be more difficult to correct it as he is unlikely to come clean and say it was his mistake.
He will blame such action on some other reason which I suspect will be spun by him to divert attention elsewhere. He could easily keep on saying it was the fall in the pound. It’s plausible.
He should consider his position as it is termed. Maybe he and Bercow could fall on their swords on the same day . Imagine the drama.
February 14, 2017
John Redwood writes
“The CPI index fell 0.5% in January compared to December.”
This is true. However there does appear to be a seasonal effect at play here. I’ve looked at the figures back to 1988 and there is clearly a consistent pattern of lower prices in January compared to the December of the previous year.
February 15, 2017
January sales?
February 14, 2017
Bad news – the target is 2% agreed by both the last Labour and this government. So any move down that takes us further away from that Labour will complain about right ? (Joke)