Inflation remains near a 40-year high despite it slowing for the third month in a row, official figures have shown.
The consumer prices index (CPI) fell to 10.1% in the year to January 2023, down 0.4 percentage points from the previous month. It means that except for August 2022 when it was 9.9%, the cost of living has remained above 10% for seven months in a row. It peaked at 11.1% in October.
When factoring in owner-occupiers’ housing costs (CPIH) inflation rose by 8.8% in the 12 months to January 2023, down from 9.2% in December.
Inflation Jan 2023
The retail prices index, the measure of inflation favoured by the trade unions in pay negotiations, remained at 13.4% in the year to January, with no change on the previous month.
The latest cost-of-living statistics, published today by the Office for National Statistics, were driven down by transport costs, particularly fuel prices, and restaurants and hotels, with rising prices in alcoholic beverages and tobacco making the largest upward contribution to the changes.
Food inflation remained high (16.7%) and is one of the enduring drivers of the main inflation figures, together with the cost of energy.
Grant Fitzner, chief economist at the ONS, said there were indications that costs facing businesses were rising less quickly, but warned “business prices remain high overall, particularly for steel and food products”.
“Petrol prices continue to fall and there was a dip in restaurant, cafe and takeaway prices,” he added. “The cost of furniture decreased by more than this time last year, in line with traditional New Year discounting.”
Chancellor Jeremy Hunt said: “High inflation strangles growth and causes pain for families and businesses – that’s why we must stick to the plan halve inflation this year, reduce debt and grow the economy.”
ONS figures released yesterday showed that real-terms pay including bonuses fell by 3.1% in the three months to December, when compared with the same period a year earlier. It said this decline was smaller than the record fall in real pay seen in 2009 (4.5%) but was among the largest falls in growth since comparable records began in 2001.
TUC general secretary Paul Nowak said: “With inflation still at more than 10%, working people are feeling the squeeze. Real wages fell faster last year than they have in decades – worse even that during the financial crisis.
“That’s why working people are desperate for a government with a plan to get pay rising. But instead, we have a prime minister determined to hold down pay and refusing to negotiate.
“Whatever Sunak thinks his plan is, it has failed. The Tory pay-squeeze has sucked the life out of our economy and left us on the brink of recession. We need a reset at the Budget – a plan to get wages rising across the economy, and funding for public sector pay.”
James Smith, research director at the Resolution Foundation think-tank, said: “Inflation continued to fall in line with the Bank [of England’s] expectations in January, but remained higher than many other advanced economies at double-digit levels.
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“The fall in services inflation, coupled with evidence yesterday that private-sector wage growth is easing, should allay some of the fears in the Bank that persistent inflation has taken hold. However, with energy and food prices remaining stubbornly high, poorer households continue to face far higher living costs than richer families.”
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