UK inflation eases slightly

Price growth nevertheless remains close to a 40-year high, official data shows

British inflation fell by more than expected last month, to 10.1% annually, which is the lowest reading since September, the Office for National Statistics (ONS) reported on Wednesday.

Data showed that the decline in the consumer price index (CPI) from 10.5% in the previous month was due to a slowdown in the rise of fuel prices. Economists polled by Reuters had forecast that inflation would drop to 10.3%.

The core inflation reading, meanwhile, which strips out food, energy, alcohol, or tobacco, was 5.3%, down from 5.8% in December, according to the ONS.

The statistics office indicated that lower costs for housing, gas and electricity, as well as for food and non-alcoholic beverages were among the main drivers of the lower headline rate. The biggest price drops from the December Christmas period into January were recorded in transport, restaurants and hotels, the ONS said.

The report comes as the Bank of England (BoE) is considering further hiking interest rates to tame inflation, which has reached the highest levels since the early 1980s. In the past 18 months, the BoE has raised rates at ten consecutive policy meetings, adding pressure on borrowers.

UK Chancellor of the Exchequer Jeremy Hunt said on Wednesday following the ONS data release that any fall in inflation is welcome, but “the fight is far from over.”

“High inflation strangles growth and causes pain for families and businesses – that’s why we must stick to the plan to halve inflation this year, reduce debt and grow the economy,” he noted.