Inflation remains steady in January
The rate of inflation remained flat at 4% in January, according to new figures released by the Office for National Statistics this morning (February 14).
Some analysts had expected January’s rate to rise to 4.2%, but today’s figures defied forecasters again.
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.”
According to the ONS, the rise in the price of utilities was offset by a fall in the cost of furniture and household goods. Meanwhile, the price of food fell again.
ONS chief economist Grant Fitzner said: “Inflation was unchanged in January reflecting counteracting effects within the basket of goods and services.
“The price of gas and electricity rose at a higher rate than this time last year due to the increase in the energy price cap, while the cost of second-hand cars went up for the first time since May.
“Offsetting these, prices of furniture and household goods decreased by more than a year ago and food prices fell on the month for the first time in over two years.
“All of these factors combined resulted in no change to the headline rate this month.”
Mike Randall, chief executive of Simply Asset Finance, said “As inflation holds there will be a moment for respite for businesses, but we also need to consider the broader picture. To bolster growth a substantial drop in interest rates is still needed, meaning inflation must start coming down at a faster pace.
“Elsewhere, we’ve seen business insolvencies reaching a 30-year high, as rising debts and increased costs have weighed down on firms. And while data shows these insolvencies aren’t happening at the same rate as the 2008 financial crisis, there is a clear need for support from both the government and lenders.
“The introduction of the renewed Help to Grow scheme is a positive step, but as the Recovery Loan Scheme comes to an end in June, it’s important we act now as an industry to provide businesses with stability and certainty. We urge the government to consider the continuity of support schemes like this to avoid the removal of another line of support, at a time it is needed most. For lenders, extra support means working closely with businesses and offering an alternative to insolvency – through refinancing, loan restructuring, or consultancy – and giving them a better chance for a future.”
