UK inflation rises to three-month highs in January

British inflation rose slightly more than expected in January, while the country remains confined by Covid-19, driven by rising food prices and lower discounts on household items, like the sofas, as the official data showed this Wednesday.

Consumer prices rose 0.7% in annual terms, following a 0.6% increase in December, according to the Office for National Statistics (ONS). A Reuters poll of economists indicated that the annual rate would remain at 0.6%.

“Inflation rose slightly in January, with the increase in food prices. Household goods also drove prices up, with fewer discounts this year on items like bedding and sofas“said ONS statistician Jonathan Athow.

The Food and beverage prices rose 0.6% between December and January -front a fall of 0.2% in the same period of the previous year- and furniture and household items they were down 1.5%, compared to a 3.3% drop a year earlier.

Clothing and footwear prices fell 4.9% in the month –the biggest decline between December and January in seven years– and recorded an annual cut of 3.8%.

The ONS said that about 8% of the prices it normally collects were not available, a lower figure than in November.

Inflation has been stuck below the Bank of England’s (BoE) 2% target since mid-2019 and the Covid-19 shutdowns pushed it close to zero last year as the economy plunged.

Earlier this month, the BoE said that expect inflation to pick up well towards its 2% target in the springas last year’s emergency cut in value added tax expires and world oil prices rise on expectations of recovery.

Economists also believe that prices for some imported goods will rise due to Britain’s new trade relationship with the European Union, which caused disruptions and delays at ports last month.

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The ONS added that it has seen no evidence that the new Brexit-related customs fees and transport costs drove consumer prices up in January.

The Bank of England has stressed that you will not be in a hurry to start withdrawing your stimulus on the ailing UK economy, saying it will wait for evidence of significant progress to reach the 2% inflation target on a sustainable basis.

The basic version of the CPI, which excludes fuel and food prices, remained stable at 1.4%.

The ONS explained that factory prices fell again, with a decrease of 0.2% in the year, while the measure of basic producer prices rose 1.4%.

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