Annualised inflation came in at 3.0% in January, up from the 2.5% reported in December.
Annualised inflation was forecast to come in at 2.8% (Trading Economics), whilst core Inflation came in at 3.7% in the 12 months to January, up from the 3.2% in December and in line with market expectations.
Nicholas Hyett, Investment Manager, Wealth Club said, “If there was any doubt about what the Bank of England would do at its March interest rate meeting there isn’t now.
“Headline inflation has jumped significanlty, and came in some way ahead of market expectations.
“Higher prices for motor fuels and airfares have pushed up transport costs, while food and non-alcoholic drinks saw prices rise 3.3% year-on-year. Both will increase the squeeze on working households, as will the rise in council tax, which has seen owner occupiers’ housing costs rocket by 8% in 12 months.
“Making matters worse is the substantial uptick in Core inflation – which strips out food and energy prices and is considered a better measure of domestically generated inflation. With Core inflation nearly twice the Bank of England’s target we see little chance the Bank starts cutting rates again any time soon.”
