UK Inflation Climbs To 0.3% In January

UK inflation rose in line with expectations to 0.3% in the year to January, according to official figures from the ONS.

This is the third consecutive month of small increases to price levels, with the growth rate in January 2016 being the same as it was in January 2015.

A rate of 0.3% means that a basket of goods and services that cost £100.00 in January 2015 would have cost £100.30 in January 2016.

Petrol prices dropped by 1.9%, compared with a larger fall of 7.3% between the same two months a year ago.

A similar, though less pronounced, effect was seen for diesel, with prices falling by 4%, compared with a fall of 6% a year ago.

Clothing, food and alcohol prices all helped push up the cost of the basket.

The Bank of England is under little pressure to raise interest rates

It  would have risen further had it not been for the offsetting impact of lower priced air fares, which have benefited from a 42% fall in jet fuel prices.

Air fair prices, overall, fell 36% compared with a smaller fall of 17% a year ago according to the ONS.

Commenting on the figures, Sky News economics editor, Ed Conway,  said: “The rate of inflation is still perilously close to what some economists call deflation.

“The Bank of England will look at this and say to itself there is no immediate pressure to raise interest rates”.

Drinkers will be disappointed to hear that the price of alcoholic beverages increased by 5.2% between December 2015 and January 2016, compared with an increase of 3.2% between the same two months a year ago.

The UK’s core inflation measure which strips out volatile energy costs slowed to 1.2% – lower than the expectations of analysts who had pencilled in a 1.3% rise.

Last year saw very low inflation throughout – with the rate being at or close to zero for most of the year. Prices for transport costs, food and non-alcoholic beverages were either static or falling, with only restaurant and hotel bills seeing significant increases.