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Inflation remains at 2.7 per cent
11:10am Tuesday 12th February 2013 in Business Daily
HOUSEHOLDS continued to come under pressure last month after figures showed inflation stayed stubbornly high at 2.7% for the fourth month in a row.
The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) was unchanged in January, but economists predict energy price hikes and rising food prices could push the rate above 3% by the summer.
In the latest figures, a fall in clothes and shoe prices failed to offset a hike in the price of alcohol, as Christmas discounts came to an end.
It is the first time that CPI inflation has remained unchanged for four months in a row since records began in 1996.
The ONS said a shortage of vegetables in the UK helped push up food and drink prices in the period, as more produce was sourced overseas. But fees for financial services such as money transfers fell. In the transport sector, a fall in fuel prices failed to offset a slower than usual drop off in air fares after Christmas.
Some economists had expected a price hike from energy giant E.ON on January 18 to push up inflation, but the ONS said the final of the "big six" energy hikes would be taken into account in February's figures.
The latest figures also show that the rate of the Retail Prices Index (RPI), which includes housing costs, rose to 3.3% in January, from 3.1% in December.
The high figures come as the Bank of England is due to publish its latest quarterly economic report on Wednesday. It has already warned it expects inflation to remain above the Government's 2% target, possibly for as long as the next two years.
The inflation figures of recent months are causing problems for policymakers as they weigh up mounting signs of economic gloom after the latest gross domestic product figures showed the economy contracted in the final three months of last year.
The Bank held off more money printing measures last week, keeping its quantitative easing programme at £375 billion, while it also kept interest rates at 0.5%. But Vicky Redwood, chief UK economist at Capital Economics, said the Monetary Policy Committee had already said it was prepared to "look through" the inflationary pressures.
© Press Association 2013
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