(Taken from Mortgage Strategy)
The UK’s Consumer Prices Index measure of inflation rose by 0.3 per cent in January, up on December’s 0.2 per cent rise.
The latest figures from the Office for National Statistics show the rise was mainly led by petrol prices, with food, alcoholic beverages and clothing also pushing up the rate.
The effects of the constant low oil prices are starting to be seen in the inflation data. Motor fuel and lubricant prices decreased by 2.6 per cent in the month, compared to a larger fall of 6.8 per cent a year ago.
Meanwhile, petrol prices dropped by 1.9 per cent, compared with a fall of 7.3 per cent in the same two months a year ago.
The CPI rise in January marks the third consecutive month of price increases.
World First chief economist Jeremy Cook says: “It is strange to think that an inflation rate of 0.3 per cent year-on-year is the highest reading we have seen for a year but that is the reality of the global inflation picture.
“Food and non-alcoholic drinks continue to remain a depressant on prices, falling by 2.6 per cent since this time last year, however gains in alcohol and tobacco as well as clothing and footwear seemed to have buoyed prices in January.
“Today’s figure is likely the first inflation reading to be positively affected by the December 2014’s declines in oil prices no longer falling within the survey period and similar falls in food prices also no longer being counted so, from a statistical point of view, it is possible that the next few months may see further increases in the rate of price increases.”
Hargreaves Lansdown senior economist Ben Brettell adds: “UK inflation has reached its highest level in a year, equalling the 0.3 per cent seen in January 2015. This continues the trend of inflation being at or very close to zero and confirms the complete absence of pressure on the Bank of England to lift interest rates.
“The headline rate continues to be largely driven by volatile fuel prices. If the recent oil price rally is sustained, we could see inflation continue to tick upwards in the coming months, though the Bank of England said earlier this month that inflation would likely undershoot the 2 per cent target until 2018.”
The Retail Prices Index measure of inflation grew by 1.3 per cent in the year ending January, up from 1.2 per cent in December.
Last month’s 0.2 per cent rise was the first time the CPI figure had exceeded 0.1 per cent since January 2015.
