UK inflation remains unchanged at 4%

Britain’s annual inflation rate remained unchanged at 4% in January despite an increase in energy bills as the cost of living crisis persisted.

Data from the Office for National Statistics showed inflation as measured by the consumer prices index defying predictions of a second successive monthly increase in January.

The Bank of England had predicted a small rise in inflation last month and the consensus forecast for economists polled by Reuters was for an increase to 4.2%.

Last month’s better-than-predicted news on the cost of living is likely to be followed by a fall in inflation to the government’s 2% target in the spring.

Inflation was last at 2% in July 2021 and rose to a peak of 11.1% in October 2022 before starting to decline.

Between December 2021 and August 2023, Threadneedle Street’s monetary policy committee raised interest rates 14 times in an attempt to ease prices pressures. The City believes lower inflation will pave the way for cuts in borrowing costs later this year.

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