Inflation falls to 10.1% – but is still at a 40-year high

Inflation remains at near a 40-year high – but finally, we’re starting to see some signs of good news. This morning’s update from the Office for National Statistics shows CPI falling to 10.1 per cent in the 12 months to January 2023, down from 10.5 per cent in December 2022. 

It’s a better update compared to January, which revealed a much smaller dip in CPI between November and December last year. Core inflation – which excludes energy and food – fell too, from 6.3 per cent on the year in December down to 5.8 per cent in January. Crucially, this easing beat the consensus, both for CPI (the expectation was 10.2 per cent) and for core inflation (expected to remain at 6.3 per cent).

This keeps the Bank’s forecast for a dramatic fall in inflation this year on track, while that reduction to core inflation will ease worries – slightly – that these price hikes are getting baked into the system.