The UK’s consumer prices index inflation stayed flat at 4% in January – unchanged from December. Economists had expected a small increase to 4.2%, so this is a softer reading than expected. Rising energy prices – after the energy regulator for Great Britain raised the price cap – were the main reason that inflation stayed at 4%, according to the UK’s Office for National Statistics. But it was furniture and household goods that prevented the expected increase. The ONS said: "The largest upward contribution to the monthly change in both CPIH and CPI annual rates came from housing and household services (principally higher gas and electricity charges), while the largest downward contribution came from furniture and household goods, and food and non-alcoholic beverages." The core measure of CPI also remained unchanged in January, at 5.1% annually. And that was lower than the 5.2% expected by economists. The core measure ignores volatile energy, food, alcohol and tobacco to try to get a more accurate picture of underlying inflationary pressures. The 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." Rachel Reeves, Labour’s shadow chancellor, said: "After 14 years of economic failure, working people are worse off. Prices are still rising in the shops, with the average households’ costs up £110 a week compared to before the last election. Inflation is still higher than the Bank of England’s target and millions of families are struggling with the cost of living. "The Conservatives cannot fix the economy because they are the reason it is broken. It’s time for change. Only Labour has a long-term plan to get Britain’s future back by delivering more jobs, more investment and cheaper bills." Hunt may not be the only person feeling somewhat relieved this morning: for the Bank of England it will likely forestall criticisms of its monetary policy stance. The reaction on financial markets suggests that may be the case: sterling has dipped by 0.14% against the US dollar and 0.2% against the euro. That move usually suggests a bet on lower rates (which are less attractive for investors able to move their money all over the world in search of better returns). The FTSE 100 has opened up 0.5%, possibly helped by a weaker pound after the inflation data. London’s blue-chip index has also been helped by strong figures from Coca-Cola Hellenic Bottling Company, a distributor of the soft drink, which is up 5% in the opening trades. Europe's Stoxx 600 is flat, France's Cac 40 is down 0.2%, Spain's Ibex is up 0.2% and Germany's Dax is flat. The agenda • 10am GMT: eurozone GDP growth rate (fourth quarter of 2023; previous 0.1% quarter on quarter; consensus 0%) • 10am GMT: eurozone industrial production (December previous -6.8% year on year; consensus -4.1%) We’ll be tracking all the main events throughout the day ...
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