The UK’s inflation rate has decreased for the third consecutive month to 10.1 percent in January, but the government has cautioned that the battle against inflation is “far from over.” According to the Office for National Statistics (ONS), the Consumer Prices Index (CPI) rose by 10.1 percent in the 12 months leading up to January 2023, down from 10.5 percent in December 2022. On a monthly basis, CPI decreased by 0.6 percent in January 2023, compared with a drop of 0.1 percent in January 2022.
Grant Fitzner, ONS chief economist, stated: “Although still at a high level, inflation eased again in January. This was driven by the price of air and coach travel dropping back after last month’s steep rise. Petrol prices continue to fall and there was a dip in restaurant, cafe and takeaway prices. The cost of furniture decreased by more than this time last year, in line with traditional New Year discounting. These were offset by rising prices for alcohol and tobacco, following on from seasonal price cuts in December and a more subdued rise at the same time last year.”
Chancellor of the Exchequer Jeremy Hunt commented: “While any fall in inflation is welcome, the fight is far from over. High inflation strangles growth and causes pain for families and businesses. That’s why we must stick to the plan halve inflation this year, reduce debt, and grow the economy.” Defence Secretary Ben Wallace told Sky News on Wednesday that the government has a “long way to go” in its attempt to bring down inflation.
Labour’s shadow chancellor Rachel Reeves criticized the Conservative government’s economic record and called for a windfall tax on oil and gas companies to reduce the pressure on household energy bills, which are expected to increase significantly in April when the government scales down its energy support scheme.
Business groups have warned that the inflation rate remains “stubbornly high” and prices have settled at a much higher level. Earlier this month, the Bank of England, the UK’s central bank, raised interest rates for the 10th consecutive time, increasing the base rate from 3.5 to 4 percent in an attempt to control inflation. Governor Andrew Bailey said that the central bank has “seen the first signs that inflation has turned the corner” and that CPI inflation is expected to fall below the Bank’s 2 percent target rate in the spring of 2024, as long as energy prices fall as expected. Nevertheless, he cautioned that it is “too soon” to declare victory over inflation and that “if there were to be evidence of more persistent pressures, then further tightening of monetary policy would be required.”