Inflation falls in January
INFLATION fell for the fourth month in a row in January, new figures show.
The CPI inflation rate fell to 3.6%, down from 4.2% in December as the impact of last year’s VAT rise dropped out of the year on year comparison.
Fuel prices, the cost of new cars and prices paid in restaurants and cafes were among the factors slowing inflation.
The headline rate has been declining since hitting a three year high of 5.2% in September and is expected to continue to fall through much of 2012.
Last week’s decision by the Monetary Policy Committee to start a fresh round of quantitative easing was driven by concerns that the inflation rate could drop below the Bank of England’s 2% target.
Coverage of the inflation data is brought to readers of TheBusinessDesk.com in partnership with stockbrokers Redmayne-Bentley.
Andrew Feldhaus, investment manager at Redmayne-Bentley, said: “The fall in UK inflation during January from December’s 4.2% to an expected 3.6% is the fourth month in a row that inflation has fallen which seems to confirm a downward trend and offer some relief to squeezed consumers.
“With last year’s VAT increase dropping out of the calculations this month’s figure has seen a significant fall and the MPC must have been confident in this figure and its medium term forecasts before extending quantative easing by £50bn last week.
“If the trend continues then further QE may be possible but the outlook for inflation is by no means benign as there is still scope for a pickup in food and fuel prices.”
The RPI measure of inflation, which includes housing costs, fell from 4.8% to 3.9%.
