January’s UK CPI inflation rate has risen to 0.3 per cent, in line with forecasts and the highest level for 12 months.
Figures from the Office for National Statistics (ONS) showed inflation recorded its third straight small increase, up from 0.2 per cent in December, driven by easing fuel deflation.
The ONS said while fuel costs continued to fall in January 2016, they fell less than in January 2015, thus adding to the inflation rate. According to Pantheon Macroeconomics, month-to-month fuel prices fell 2.6 per cent last month compared to 6.8 per cent in January 2015.
There were small inflationary pressures from food, alcohol and clothing, according to the ONS. Downward pressure mainly came from air fares, but the ONS said this factor was highly variable.
Capital Economics UK economist Scott Bowman noted that core inflation - which strips out the likes of fuel - fell from 1.4 per cent to 1.2 per cent on the month.
He added: “Although the fall in core inflation was partly driven by the erratic airfare component, governor Carney has said recently that he would need to see a pick-up in core inflation before raising interest rates.”