UK inflation rate steady at 2.7% last month

Tuesday 12 February 2013 15.42
UK prices for food and drink up, but transport fees fall
UK prices for food and drink up, but transport fees fall

The rate of consumer price index inflation in the UK remained unchanged in January at 2.7%, official figures showed today.

The ONS said a shortage of vegetables in the UK helped push up food and drink prices in the period, as more produce was sourced overseas.

But fees for financial services such as money transfers fell.

In the transport sector, a fall in fuel prices failed to offset a slower than usual drop off in air fares after Christmas.

Some economists had expected a price hike from energy giant E.ON on 18 January to push up inflation, but the ONS said the final of the "big six" energy hikes would be taken into account in February's figures.

Today's figures also show that the rate of the retail prices index, which includes housing costs, rose to 3.3% in January, from 3.1% in December.

The high figures come as the Bank of England is due to publish its latest quarterly economic report tomorrow.

It has already warned it expects inflation to remain above the Government's 2% target, possibly for as long as the next two years.

That means one of Mark Carney's first tasks as governor this summer could be to write a letter to the chancellor to explain why inflation is more than 1% above target.

The inflation figures of recent months are causing problems for policymakers as they weigh up mounting signs of economic gloom after the latest gross domestic product figures showed the economy contracted in the final three months of last year.

The Bank of England held off more money printing measures last week, keeping its quantitative easing programme at £375 billion sterling, while it also kept interest rates at 0.5%. Higher inflation is putting pressure on UK consumer spending as wages grow at a slower rate.

A Treasury spokesperson said: "Inflation is down by almost a half from its peak of 5.2%. The Government has taken continued action to help with the cost of living, by announcing a further increase in the tax-free personal allowance and freezing fuel duty for more than two years."