January’s Inflation Shock: Bank of England’s Decision Tightened
Quick recap: The annualised rate jumped to 3.0% in January, up from 2.5% in December. Core inflation hit 3.7% – a solid rise from 3.2% the month before.
Why the numbers climbed
- Fuel & Flights: Motor fuels and airfares climbed, dragging transport costs higher.
- Food & Drinks: Grocery prices rose 3.3% YoY.
- Council Tax: Owner‑occupier housing costs shot up an eye‑opening 8%.
- Core inflation: A clear sign that even after stripping out food and energy, prices are still rising.
Expert Take: Nicholas Hyett
“If there was any doubt about what the Bank of England would do at its March interest rate meeting there isn’t now.”
“Headline inflation has jumped significantly, and came in some way ahead of market expectations.”
“Higher prices for motor fuels and airfares have pushed up transport costs, while food and non‑alcoholic drinks saw prices rise 3.3% year‑on‑year.”
“Both will increase the squeeze on working households, as will the rise in council tax.”
“Making matters worse is the substantial uptick in Core inflation – which strips out food and energy prices and is considered a better measure of domestically generated inflation.”
He added, “With Core inflation nearly twice the Bank of England’s target we see little chance the Bank starts cutting rates again any time soon.”
What this means for you
Prices are climbing faster than picky fans of “sticking to the budget.” Your wallet feels the tightening, making everyday spending feel a bit more like a financial squeeze – all the more reason to keep a close eye on cost‑cutting strategies.
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