The governor of the Bank of England, Andrew Bailey, finds the unchanged UK inflation rate at 4% "encouraging." However, he suggested that this stability doesn't necessarily imply earlier interest rate cuts.
Despite expectations of a faster rise in prices due to increased energy bills, January's inflation remained at 4%, surprising experts. Investors are now betting on interest rate cuts in June.
Last month witnessed the first drop in food prices in over two years, but the overall cost of a weekly shopping trip is still considerably higher than two years ago. While items like cake and crisps helped balance the impact of rising energy costs, the prices of cooking sauce and instant coffee eased.
Global events, such as Russia's invasion of Ukraine, significantly affected energy prices and grain supplies, causing a sharp rise in shop prices. Additionally, adverse weather conditions in Europe and North Africa, along with labour shortages in the UK, impacted crop yields.
Lower price increases for furniture and household items, coupled with retailers offering significant discounts to clear post-Christmas stock, contributed to keeping inflation in check, according to official figures.
Daisy McAndrew and Dan Wallis get more insight from market analyst Victoria Scholar.
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