Chancellor Jeremy Hunt has hailed “huge progress” on managing inflation, after Britain’s economy once again beat expectations from gloomy forecasters.
Economists had spent the week briefing that Rishi Sunak may face a cost of living nightmare this morning, ahead of official January inflation statistics.
However the Office for National Statistics has now confirmed that the rate of Consumer Prices Index inflation (CPI) remained steady at 4 percent, unmoving from December.
On Sunday, a top economist at broker Panmure Gordon told the Times he’d seen estimates that CPI could increase to anywhere between 4.3 and 4.5 percent.
This beating of expectations was celebrated by Chancellor Jeremy Hunt, who this morning said that while Inflation “never falls in a perfect straight line” the data show the “plan is working”.
He added: “We have made huge progress in bringing inflation down from 11 percent, and the Bank of England forecast that it will fall to around 2% in a matter of months.”
Top economist Julian Jessop agreed, saying the 4 percent January figure “is a relief”.
He added that it signals Britain is on track for 2 percent inflation or lower by as early as April, leading to the first interest rate cut in May.
Inflation came in lower than expected largely thanks to two categories: furniture and household goods, and good and non-alcoholic beverages.
Meanwhile housing and household services saw the biggest increase in prices during the month, of around 0.175 percentage points.
The Spectator’s Andrew Neil also said the pause in inflation falling didn’t dampen his optimism that things will improve rapidly over the coming months.
Mr Neil tweeted: “Despite this pause on its downward trajectory, I am expecting a substantial tumble in the months to come”.
Tory MP Brandon Lewis said the figures were “Good news for the economy and the money in people’s pockets”.
He added he is now “positive for hopes of seeing fall back to the BoE target of 2%”.
Labour’s Rachel Reeves said: “After fourteen years of economic failure working people are worse off. Prices are still rising in the shops, with the average households’ costs up £110 a week compared to before the last election.
“Inflation is still higher than the Bank of England’s target and millions of families are struggling with the cost of living.
“The Conservatives cannot fix the economy because they are the reason it is broken. It’s time for change. Only Labour has a long-term plan to get Britain’s future back by delivering more jobs, more investment and cheaper bills.”
