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Inflation in the United Kingdom increased to 3% in January, going beyond expectations and highlighting the challenge for the Bank of England, because it is struggling with persistent price pressures and a weakened economy.
The annual price growth rate was higher than 2.5% recorded in December and the 2.8% forecast by economists interviewed by Reuters, the Office for National Statistics announced on Wednesday. It was also well above the recent 1.7% lower in September.
Inflation of services, a key measurement of underlying prices pressure, increased to 5% in January, compared to 4.4% in December, but was lower than the expectations of economists of 5.2%.
The chief economist of the ONS, Grant Fitzner, said: “After falling this time last year, the cost of food and non -alcoholic drinks increased, especially meat, bread and cereals . Private school fees were another factor because the new VAT rules meant that prices increased by almost 13% this month. »»
The BOE said this month that prices pressures were on “a jumping route” because it provided that inflation would increase to 3.7% in the year, powered by higher global energy costs. The Central Bank said it expected inflation later falling to its target of 2%.
Responding to Wednesday figures, Chancellor Rachel Reeves said: “Getting more money in people’s pockets is my number one mission. Since the elections, we have seen wages from year to year after growth in inflation at the fastest rate – of an additional value of £ 1,000 per year on average – but I know that millions of families have Still difficult to reach both ends. »»
The data published Tuesday showed strong growth in wages in the United Kingdom to the exclusion of premiums, increasing at an annual rate of 5.9% in the three months and December, against 5.6% in the three months and November.
However, economic growth was low, the official data last week showing a marginal expansion of 0.1% in the three months and December, after the stagnation of the previous quarter.
BOE Governor Andrew Bailey said on Tuesday that the central bank was able to reduce interest rates three times since last summer due to the drop in inflation and because “we are confronted with an environment low growth in the United Kingdom ”.
But he added that the expected increase in inflation was among the “challenges” to come for the BOE, as well as global uncertainty, and reiterated its intention to adopt a “progressive and prudent” approach to lower rate cut of interest.
