Inflation stays at four percent in January

This unchanged annual rate between December and January came because of prices falling by 0.6% on the month, the same rate as it was between December 2022 and January 2023. 

Consumer prices index including owner occupiers’ housing costs (CPIH) also remained the same – staying at 4.2% in the 12 months to January 2024, and down from a recent peak of 9.6% in October 2022.  

Broken down by sector, the most notable decline was seen in the annual rate of food and non-alcoholic beverage prices – which dropped from eight percent to seven percent – the lowest annual rate since April 2022.  

The fall to seven percent means the annual rate has eased for the tenth consecutive month, from a recent high of 19.2% in March 2023 – which was the highest annual rate seen for more than 45 years.  

Reflecting on this, the National Institute of Economic Social Research economist Paula Bejarano Carbo said: “This annual CPI inflation rate represents a downward surprise in inflation as our most recent UK Economic Outlook forecast a rise in CPI inflation in January, suggesting that there were less upward contributions to the monthly rate of inflation than expected.  

“Given our forecast that inflation is set to fall throughout the remainder of the first half of 2024 due to base effects, today’s downward surprise may signal that inflation is set to fall even faster than we projected.

“However, this is unclear given today’s core inflation figure remaining unchanged at 5.1% and services inflation rising to 6.5% from 6.4% in December, which indicate that underlying inflationary pressures remain elevated.”