Yahoo Finance UK inflation holds steady at 4%
The UK rate of inflation unexpectedly remained unchanged at 4% in January, according to official figures.
Inflation, which measures how prices rise over time, stood at 4% in the year to January, said the Office for National Statistics.
The figure was the same as in December and came in below economists' forecasts, including the Bank of England. Economists polled by Reuters expected prices to rise by 4.2% compared to the same month last year.
Keeping prices rising was the energy price cap, which rose in January, bringing up the cost of gas and electricity.
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The new energy price cap meant the typical annual household bill went up to £1,928, an increase of £94.
However, higher energy prices were offset by falls in the cost of furniture and household goods, and food and non-alcoholic drinks.
The ONS said monthly prices for food and non-alcoholic beverages fell by 0.4% between December and January, compared with a rise of 0.6% a year ago.
Monthly prices for food (excluding non-alcoholic beverages) also fell by 0.4%.
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This was the first fall in monthly prices since September 2021, and the largest fall since July 2021.
The drop eases pressure on the Bank of England to keep interest rates higher for longer to bring inflation back down to its 2% target.
Chancellor Jeremy Hunt said: “Inflation never falls in a perfect straight line, but the plan is working; we have made huge progress in bringing inflation down from 11%, and the Bank of England forecast that it will fall to around 2% in a matter of months.”
The closely watched core CPI figure — which excludes volatile food, energy, alcohol and tobacco prices — came in at an annual 5.1%, below a consensus estimate of 5.2%.
Alice Haine, personal finance analyst at Bestinvest by Evelyn Partners, said despite being lower than expected, inflation remains "worrying" for households hoping to see the back of the cost of living crisis.
She added: "The latest inflation data may also be a blow for mortgage holders and prospective buyers desperately hoping for interest rate cuts.
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"Borrowing costs remain high relative to the pre-tightening cycle instigated by the Bank of England in December 2021, but the good news is that fixed mortgage rates have eased significantly from their peak last summer.
"The latest inflation data may also be a blow for mortgage holders and prospective buyers desperately hoping for interest rate cuts."
Watch: Inflation unchanged in January as food prices fall for first time since 2021
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