United Kingdom: Inflation moderates in January
February 18, 2014
In January, consumer prices fell 0.6% over the previous month, which represented the first drop following five positive readings. The print contrasted the 0.4% rise observed in December and came in below market expectations of a 0.5% decline. Lower prices for clothing and footwear as well as for furnishings, household equipment and routine house maintenance, were the most important drivers behind the monthly drop.
Reflecting the lower monthly print, annual inflation fell slightly from 2.0% in December to 1.9% in January. Meanwhile, annual average inflation inched down from 2.6% in December to 2.5% in January.
In its latest inflation report from November, the Bank of England projects that inflation will average 2.2% in both 2014 and 2015. FocusEconomics Consensus Forecast panelists expect inflation to average 2.6% in 2014, which is unchanged from last month's forecast. For 2015, the panel forecasts inflation to average 2.3%.
Author: Dirina Mançellari, Senior Economist