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| UK inflation rate lower at 2.7% | |
| (10 minutes later) | |
| Britain's inflation rates eased slightly in January after jumping to an 11-year high in the previous month. | |
| The Consumer Prices Index dropped to 2.7% from 3%, according to the Office for National Statistics. | |
| The Bank of England has raised interest rates three times since August in a bid to bring inflation down to a 2% target. | The Bank of England has raised interest rates three times since August in a bid to bring inflation down to a 2% target. |
| Price pressures could ease this year as fuel costs fall. However, many analysts believe that a further rate rise is likely in the next three months. | |
| 'Concerns' | 'Concerns' |
| "With inflation likely to remain high through the first quarter, and the Monetary Policy Committee (MPC) sensitive to the upside risks to its inflation objective, our forecast anticipates a further move upward in interest rates at one of the next two meetings," said JP Morgan economist Malcolm Barr. | "With inflation likely to remain high through the first quarter, and the Monetary Policy Committee (MPC) sensitive to the upside risks to its inflation objective, our forecast anticipates a further move upward in interest rates at one of the next two meetings," said JP Morgan economist Malcolm Barr. |
| A further rise in inflation to a rate above 3% would require Bank of England Governor Mervyn King to write a letter to the government explaining the reasons behind the increase. | A further rise in inflation to a rate above 3% would require Bank of England Governor Mervyn King to write a letter to the government explaining the reasons behind the increase. |
| The news should soothe some of the MPC's concerns Philip Shaw, chief economist, Investec Securities Personal impact of inflation class="" href="/1/hi/business/6356475.stm">Inflation Q&A | |
| No governor has so far had to do so since the Bank was given control of setting interest rates a decade ago. | No governor has so far had to do so since the Bank was given control of setting interest rates a decade ago. |
| December's increase in consumer price inflation was mirrored by a rise in the Retail Prices Index - which includes mortgage interest payments and is often used as a basis for wage demands - to 4.4%, its highest level since 1991. | December's increase in consumer price inflation was mirrored by a rise in the Retail Prices Index - which includes mortgage interest payments and is often used as a basis for wage demands - to 4.4%, its highest level since 1991. |
| Philip Shaw, chief economist with Investec Securities said he expected the inflation numbers to be a relief for Mr King. | Philip Shaw, chief economist with Investec Securities said he expected the inflation numbers to be a relief for Mr King. |
| "The news should soothe some of the MPC's concerns," he said. | "The news should soothe some of the MPC's concerns," he said. |
| But he added that seasonal food prices were tipped to be higher last month. and reductions on clothing and footwear were less dramatic than they had been in the sales a year earlier. | But he added that seasonal food prices were tipped to be higher last month. and reductions on clothing and footwear were less dramatic than they had been in the sales a year earlier. |
| Mr Shaw said he though inflation would remain "uncomfortably high" until March, when the impact of energy prices would be seen. | Mr Shaw said he though inflation would remain "uncomfortably high" until March, when the impact of energy prices would be seen. |