Inflation remains close to a 40-year high despite falling in January, according to the latest data from the Office for National Statistics (ONS).
The ONS found that inflation fell to 10.1% in the year to January 2023 from 10.5% in December 2022. The Bank of England has also reported that inflation ‘might now have turned a corner’ . The drop has been linked to the costs of fuel, restaurant and hotel prices slowing. The data also revealed that, on a monthly basis, the Consumer Prices Index (CPI) fell by 0.6% in January 2023, compared to a fall of 0.1% in January 2022.
However, the ONS found that food inflation remains high with the 12 month rate to January 2023 at 16.7%. The largest upward contributions to the annual Consumer Prices Index including owner occupiers’ housing costs (CPIH) inflation rate in January came from housing and household services, food and non-alcoholic beverages.
Alpesh Paleja, Lead Economist at the Confederation of British Industry (CBI), said:
‘Another fall in inflation over January suggests that the tide is turning on price pressures. But with inflation and pipeline cost pressures set to remain high this year, households and businesses are likely to feel the pain for a while yet. In particular, the continued strength in more domestic measures of inflation will keep alarm bells ringing at the Bank of England.
‘Given the central role played by energy prices in driving inflation up over the past year, the government must use the upcoming Budget to deliver a home-grown, secure, low-cost and low-carbon energy system. Measures that boost green investment will not only help reduce exposure to volatility in global energy prices, but also deliver a sustainable path to reaching net zero.’