UK inflation up to 0.7% in January with food price hike

UK inflation increased last month on the back of higher food prices and more expensive household goods, according to official figures.

The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation increased to 0.7% in January from 0.6% in December.

The figure was ahead of analyst expectations, with a consensus of economists having predicted inflation of 0.5% for the month.

Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: “Inflation rose slightly in January, with food prices increasing.

“Household goods also pushed up prices with less discounting this year on items such as bedding and settees.

“However, there were widespread January sales, with particular price cuts for clothing and footwear.”

Food and non-alcoholic drink prices increased by 0.6%, driven particularly by more expensive cauliflowers and potato crisps.

The ONS also flagged that there was volatility in fish prices following the UK’s exit from the EU, with price increases for prawns, frozen fish fingers and fresh salmon.

It said the largest contribution to the increase in inflation came from furniture and home furnishings, as the sector saw significantly reduced discounting on leather settees and double beds.

These increases were partially offset by cheaper clothing as retailers heavily discounted items online.

Mr Athow said: “There were widespread January sales, with particular price cuts for clothing and footwear.”

• UK’s economy shrunk faster than at any point in 100 years in 2020

• Will economy really bounce back in 12 months? The Bank of England thinks so

• When will the job market return to normal? And will GDP recover?

The price of clothing and footwear slid by 4.8% for the month.

The Retail Price Index (RPI), a separate measure of inflation, increased to 1.4% from 0.9% in December.

The CPI, including owner-occupiers’ housing costs (CPIH) – the ONS’s preferred measure of inflation – was 0.9% in January, up from 0.8% last month.

Laith Khalaf, financial analyst at AJ Bell, said: “While the headline CPI rate is glacially cool, the debate between inflation and deflation is raging.

“Commodity prices have been creeping up, and the market seems to be buying into a global economic recovery, with cyclical stocks performing well.

“Combined with the huge amount of monetary and fiscal stimulus pumped into the economy, that suggests that inflationary pressures may be brewing.”