UK inflation rate climbs to 0.7 pct in January

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LONDON, Feb. 17 (Xinhua) — Britain’s Consumer Prices Index (CPI) 12-month rate rose to 0.7 percent in January, up from 0.6 percent in December, the British Office for National Statistics (ONS) said Wednesday.

Despite a rise to the reading of 0.7 percent in January, it remained far below than the Bank of England’s 2 percent target for inflations.

Meanwhile, the CPI including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 0.9 percent in January, up from 0.8 percent to December, said the ONS.

“Furniture and household goods, restaurants and hotels, food, and transport had the largest upward contributions to the change in the January 2021 12-month rate, while falling clothing and footwear prices had a downward effect,” said the statistical body.

James Smith, a developed markets economist at financial services firm ING, said that “for various quirky reasons, UK inflation nudged higher in January, a move that is set to continue and take headline CPI to 2 percent by year-end.”

However, Smith casted doubt on if the inflation of 2 percent will last in the next year, saying that “we expect headline CPI to dip below target again in 2022” and “this implies higher inflation is unlikely to be a major concern for the Bank of England.”

Paul Dales, an economist at the Capital Economics UK, an economic research consultancy based in London, said the rise in CPI inflation in January was “trivial given that leaps to around 2.0 percent in April and to around 2.5 percent by the end of the year appear to be baked in the cake.”

“That would knock on the head any lingering hopes of more policy stimulus from the Bank of England, although we doubt it would prompt tighter monetary policy either,” said Dales.

The ONS data came after Britain recorded another 10,625 coronavirus cases and 799 coronavirus-related deaths on Tuesday.

England is currently under the third national lockdown since the outbreak of the pandemic in the country. Similar restriction measures are also in place in Scotland, Wales and Northern Ireland.

To bring life back to normal, countries such as Britain, China, Germany, Russia and the United States have been racing against time to roll out coronavirus vaccines. Enditem

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