The fall in transport costs is the main factor in the appeasement of prices. evannovostro / stock.adobe.com
However, it remains at historically high levels and contributes to the cost of living crisis affecting the country.
UK inflation slowed to 10.1% in January year on year from 10.5% in December, but remains at historically very high levels and is fueling a severe cost of living crisis, the UK said on Wednesday. NSO. The fall in the cost of transport, in particular gasoline, is the main calming factor, followed by that of prices in restaurants and hotels, the prices of furniture having also fallen more sharply than a year earlier during the first month of the year, the traditional sales period.
Grant Fitzner, Chief Economist of the Office for National Statistics (ONS), says there are “more signs that costs facing businesses are rising more slowly, thanks to falling crude oil and electricity prices“, among others. He notes, however, that theprices for businesses remain high overall, especially for steel and food”, according to the monthly report of the ONS.
Chancellor of the Exchequer Jeremy Hunt for his part judged the fight against inflation, which “strangles growth and hits families and businesses», «far from over“, promising the continuation of the government’s plan to divide it in two this year. After peaking at over 11% in October, “a further decline in inflation in January suggests that the tide has turned on prices“, comments for his part Alpesh Paleja, principal economist of the CBI, the main British employers’ organization.
He believes, however, that the surge in prices remains strong enough for “alarm bells continue to ring at the Bank of England(BoE). The latter needs more indications that this decline will continue before stopping to tighten interest rates, argued last week its governor, Andrew Bailey.
The BoE expects inflation to fall to less than 5% by the end of the year, while its target is 2% at most. It signaled at its meeting in early February, after a tenth consecutive rate hike, that it could soon stop raising them if inflation evolves in line with these predictions. Sluggish growth in the country, which barely avoided recession in 2022 but appears to be headed for it this year, is one factor that could prompt the BoE to end its monetary tightening, but market tensions work continue to worry him.
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Strikes to demand better wages are increasing in the country in the face of double-digit inflation, particularly in view of an unemployment rate still extremely low at 3.7%, and in a context of shortages of workers. The pound fell 0.59% to 1.2105 dollars, and lost ground against the euro as well.