UK inflation rate unchanged at 4% in January as Hunt says ‘plan is working’ – live

Falling furniture and household goods prices helped to keep inflation at 4 per cent, the Office for National Statistics said.

The ONS said food prices fell on a monthly basis for the first time since September 2021, and the largest downward push on inflation came from furniture and household goods.

ONS chief economist Grant Fitzner said: “Inflation was unchanged in January, reflecting counteracting effects within the basket of goods and services.

“The price of gas and electricity rose at a higher rate than this time last year due to the increase in the energy price cap, while the cost of second-hand cars went up for the first time since May.

“Offsetting these, prices of furniture and household goods decreased by more than a year ago and food prices fell on the month for the first time in over two years.

“All of these factors combined resulted in no change to the headline rate this month.”

Shadow chancellor Rachel Reeves said: “After 14 years of economic failure working people are worse off. Prices are still rising in the shops, with the average household’s costs up £110-a-week compared to before the last election.

“Inflation is still higher than the Bank of England’s target and millions of families are struggling with the cost of living.

“The Conservatives cannot fix the economy because they are the reason it is broken. It’s time for change. Only Labour has a long-term plan to get Britain’s future back by delivering more jobs, more investment and cheaper bills.”

Jeremy Hunt has said the Bank of England will meet its inflation target of 2 per cent in a matter of months.

The chancellor said: “Inflation never falls in a perfect straight line, but the plan is working; we have made huge progress in bringing inflation down from 11 per cent, and the Bank of England forecast that it will fall to around 2 per cent in a matter of months.”

The prime minister entered Downing Street in October 2020 promising to halve inflation by the end of last year; a target that he met.

But although the rate stayed stable in January and is less than half of what it was at its peak of 11 per cent, it remains more than double the Bank of England’s target of 2 per cent.

Fears have also been growing that attacks in the Red Sea, which serves as the entry point to the Suez Canal, one of the world’s busiest shipping lanes, could drive up the price of oil and gas.

The frozen inflation rate will serve as a stark reminder that the cost of living crisis is not yet over after Rishi Sunak said that the UK economy had “turned a corner”.

As recently as Monday, the prime minister said that the economy was “heading in the right direction” but the frozen rate shows there remains work to do.

And separate data to be published on Thursday could show that the UK has entered a recession after gloomy figures released last month showed that retailers suffered a dire Christmas as families cut back on spending amid the cost of living crisis.

Inflation has stayed at 4 per cent after rising in January, official figures show.

Office for National Statistics figures published on Wednesday morning showed the Consumer Prices Index was at 4 per cent in January.

While all eyes are on today’s new inflation figures, data released earlier this week also suggested that UK wage growth had slowed to its lowest level for more than a year, while vacancies also fell back once again as Britain’s jobs market cools further.

The Office for National Statistics (ONS) said average regular pay, excluding bonuses, fell to 6.2 per cent in the quarter to December, down from an upwardly revised 6.7 per cent in the three months to November. This was the slowest growth seen since the three months to October 2022.

But when taking Consumer Prices Index (CPI) inflation into account, real regular wages rose by 1.9 per cent – a high since summer 2019, excluding the pandemic-skewed years.

This is thanks to inflation having fallen back sharply from the 41-year high of 11.1 per cent seen in October 2022. Holly Williams has the full report:

With some mortgage rates rising ahead of the inflation figures on Wednesday, the market is volatile and homeowners on variable rates, or those coming off fixed rates, will be wondering if they should go for a new mortgage product with a rate, or stick at their lender’s variable rate in the hope that rates will go down later in the year.

Ken James, director at Contractor Mortgage Services, told The Independent: “It varies from person to person … are they on a variable rate because they are looking to sell, are they waiting for prices to fall and don’t want to lock into anything now because they feel the prices are high and they want to see if they can get a cheaper deal?

“The downside to that is whilst they are sitting on the fence, it’s costing them as the variable rates are extremely high.

“So the conversation we are having at the moment is is there a halfway house where they can mitigate the increase of the variable rate, but not getting stuck into a fix?

“The halfway house of course now is tracker rates, so a lot more people now are contemplating if tracker rates might be the right way to go. It’s not as cheap as a fixed but it’s not tied to a variable. Maybe go on a tracker rate and ride the storm and see where it takes us.”

My colleague Alex Ross has more in this report:

On Tuesday, figures from the US showed that inflation slowed to 3.1 per cent from 3.4 per cent earlier, but the slowdown was less than the drop to 2.9 per cent that had been expected.

Axel Rudolph, senior market analyst at IG, said: “A higher-than-expected US CPI print provoked a sell-off in global equities as rate cut expectations are pushed back.”