By Kayode Sanni-Arewa
The U.K.’s inflation rate rose sharply to 3 per cent in January, coming in above analysts projections according to data released by the Office for National Statistics (ONS) on Wednesday.
Economists polled by Reuters had expected a reading of 2.8 per cent in the twelve months to January.
Britain’s consumer price index (CPI) fell to a lower-than-expected 2.5 per cent in December, with core price growth also slowing further.
Core inflation, which excludes more volatile energy, food, alcohol and tobacco prices, rose by 3.7 per cent in the 12 months to January, which was up from 3.2 per cent in the previous month.
Notably, the core services annual rate rose from 4.4 per cent to 5.0 per cent, the ONS said.
“Inflation increased sharply this month to its highest annual rate since March last year. The rise was driven by air fares not falling as much as we usually see at this time of year, partly impacted by the timing of flights over Christmas and New Year. This was the weakest January dip since 2020,” Grant Fitzner, the ONS’ chief economist, commented Wednesday.
After falling this time last year, the cost of food and non-alcoholic drinks increased, particularly meat, bread and cereals. Private school fees were another factor, as new VAT [a sales tax] rules meant prices rose nearly 13 per cent this month,” he said, in comments on the X social media platform.
Responding to the latest data, U.K. Chancellor Rachel Reeves said that delivering economic growth and “getting more money in people’s pockets” were her priorities, while acknowledging that “millions of families are still struggling to make ends meet.”
The British pound was little changed against the dollar following the data release, trading at $1.2615.