The News
UK inflation rose by more than expected to hit a ten-month high of 3% in January indicating that an imminent interest rate cut may be unlikely.
Consumer price inflation increased from 2.5% in December, driven up by the cost of meat, bread, cereals, and airfares, as well as the government’s move to impose a value-added tax on private school fees.
The unexpected rise makes it “improbable” that the Bank of England will cut interest rates in March, an economist told Bloomberg. The UK’s economic growth has been “broadly flat” over the last few months, and increasing inflation is likely to curb consumer spending further.
UK Chancellor Rachel Reeves said: “Since the election we’ve seen year-on-year wages after inflation growing at their fastest rate – worth an extra £1,000 a year on average – but I know that millions of families are still struggling to make ends meet.”