Good inflation news

Linda Hall

UK inflation fell for a third consecutive month in January, but remained in double digits.

The Office for National Statistics (ONS) said the annual inflation rate measured by the consumer prices index fell to 10.1 per cent last month, following December’s 10.5 per cent and October’s 11.1 per cent peak. City economists had forecast a more modest drop to 10.3 per cent.

The latest fall was assisted by the ongoing fall in petrol and diesel prices for motorists earlier in the year, as well as reductions in air and coach travel after their hefty rise last December.

Restaurant, cafe and takeaway prices also fell, with the cost of furni­ ture dropping during the January sales.

Nevertheless, food and drink inflation remained close to their highest rates since the 1970s as milk, bread and the cost of other essentials soared by almost 17 per cent in a year.

The ONS figures came as the Bank of England contemplated another interest rate rise to tackle the highest inflation levels since the early 1980s.

UK inflation is still higher than in the European Union’s 20 eurozone countries or the US, which some forecasters attributed to the UK’s chronic worker shortages and constraints including Brexit that have added to inflationary pressure.

“While any fall in inflation is welcome, the fight is far from over,” Chancellor Jeremy Hunt said.

“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.”