Categories
Headlines

UK inflation at six-month high as petrol prices rise

Hand at petrol pumpImage copyright
Getty Images

UK inflation in January rose to a six-month high as the cost of petrol and house prices rose, office figures show.

The Consumer Prices Index (CPI) stood at 1.8% last month, up from 1.3% in December, the Office for National Statistics said.

“The rise in inflation is largely the result of higher prices at the pump and airfares falling by less than a year ago,” the ONS said.

The rise is ahead of economists’ CPI forecast of 1.7% in January.

The figure remains below the Bank of England’s 2% target for inflation.

Why is inflation rising?

Mike Hardie, head of inflation at the ONS, said: “The rise in inflation is largely the result of higher prices at the pump and airfares falling by less than a year ago. In addition, gas and electricity prices were unchanged this month, but fell this time last year due to the introduction of the energy price cap.

The ONS also said that annual house prices grew across all regions of the UK, the first time this has happened in nearly two years.

The most recent wages data released on Tuesday showed that average weekly wages in the UK reached their highest levels since before the financial crisis.

Weekly pay reached £512 in the three months to December, which – adjusting for inflation – is the highest since March 2008.

Excluding bonuses, earnings grew at an annual rate of 3.2% in the three months to December.

Inflation is one key factor the Bank of England considers when setting the “base rate”. That influences what interest rate banks can charge people to borrow money, or what they pay on their savings.

If it thinks inflation is likely to be below 2%, it may cut interest rates to lower the cost of borrowing and therefore encourage spending.

The rate currently stands at 0.75%. The central bank’s Monetary Policy Committee is next due to meet on 26 March.

Avatar

By Laura Price

Laura is the senior writer and Smartphones section editor responsible for managing software updates and smartphones section. She is very passionate about Gadgets & Technology and always looking around to use them in an innovative way in daily life. She reviews Gadgets & Applications to tell users about their optimum use to get the most out of in which they’ve put their time and hard earned money.
Email:[email protected]