UK consumer price inflation increased in January driven by higher cost of household goods, restaurants and food, data from the Office for National Statistics showed on Wednesday.
Consumer price inflation rose slightly to 0.7 percent from 0.6 percent in December. The rate was forecast to remain stable at 0.6 percent.
Month-on-month, consumer prices dropped 0.2 percent after rising 0.3 percent a month ago. Prices were forecast to ease 0.4 percent.
While furniture and household goods, restaurants and hotels, food, and transport had the largest upward contributions to the annual rate, clothing and footwear prices provided downward contribution due to the increased discounting.
Excluding energy, food, alcoholic beverages and tobacco, core inflation held steady at 1.4 percent in January, while it was forecast to slow to 1.3 percent.
At the monetary policy meeting, the Bank of England said the headline inflation is forecast to rise quite sharply towards the 2 percent target in the Spring, as the reduction in VAT for certain services comes to an end and given developments in energy prices.
“We still think that a fall back in oil prices, the effects of the stronger pound and the legacy of spare capacity will drag inflation back below 2 percent in 2022,” Paul Dales, an economist at Capital Economics, said.
Another report from the ONS showed that output price inflation remained negative for the eleventh consecutive month in January.
Output prices fell 0.2 percent annually in January, but slower than the 0.5 percent decrease in December. Prices were forecast to fall 0.4 percent.
Meanwhile, monthly output price inflation doubled to 0.4 percent from 0.2 percent in December.
Input prices grew at a faster pace of 1.3 percent on year in January, following a 0.6 percent rise in December. This was the second consecutive rise. Prices were expected to rise again by 0.6 percent.
On a monthly basis, the rate of input price growth slowed to 0.7 percent from 1.2 percent, data showed.
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