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Fuel prices push inflation to six-month high

Joanna Faith
Written By:
Joanna Faith

Rising fuel prices helped drive UK inflation to a six-month high in January, official figures show.

The Consumer Prices Index (CPI) measure of inflation unexpectedly rose to 1.8% last month, up from 1.3% in December, according to figures from the Office for National Statistics (ONS).

“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 said.

Inflation has been below the government’s 2% target since August last year, which had been putting pressure on the Bank of England to cut interest rates.

“The jump in inflation this month may lead the Bank to continue its wait-and-see approach before it makes a move on rates,” said Laura Suter, personal finance analyst at investment platform AJ Bell.

The latest wage inflation figures released yesterday show pay is increasing by 3.2%, excluding bonuses, and while this is a drop on the previous data, it’s still far ahead of inflation.

Ed Monk, associate director for personal investing at Fidelity International, said: “Today’s rise in inflation is a worrying sign for households, particularly given the fall in average wage rises that was confirmed yesterday. Pay is still rising ahead of prices but by less than we assumed just a month ago, and today’s numbers suggest total pay growth is now just 1.1% ahead of inflation.”