Fuel prices keep inflation above 2%
LONDON (AP) — Consumer prices in Britain rose more than the government's two percent target in January for the fourth straight month, thanks in part to fuel inflation, official figures indicated yesterday.
The Consumer Price Index — the official rate of inflation — rose by 2.2 percent in the year ending in January, up from 2.1 percent in the December report, the Office for National Statistics said. While the rise in inflation was lower than the 2.3 percent predicted by economists, some analysts expect food prices and utility bills to rise further in the months ahead. That could motivate the Bank of England to halt or slow its reduction in interest rates.
Last week, the bank cut interest rates by a quarter of a percentage point to 5.25 percent, its second cut in three months as it attempted to shore up confidence in Britain's slowing economy.
The rate cut had been widely anticipated by analysts who had expected the central bank's monetary policy committee to set aside conflicting concerns about accelerating inflation.
"While the data will be of some relief to the Bank of England, consumer price inflation nevertheless seems set to rise significantly higher over the coming months as rising utility bills, elevated food prices and a weaker pound impact," said Howard Archer, an economist at Global Insight.
In yesterday's report, the Office for National Statistics said the main cause of the 2.2 percent increase in January was an annual inflation of 19.3 percent for fuels and lubricants for personal vehicles, the highest rate since it first began to be calculated in 1997.