UK inflation might be easing – but don’t expect prices to fall

With food inflation at 16.7% and cost of gas up 130%, poorer households are still bearing the brunt of the cost of living crisis

Britain’s cost of living crisis is still raging but inflationary pressures are now easing. Fears of a wage-price spiral look overblown. Bank of England interest-rate setters will take comfort and the peak in official borrowing costs is close at hand.

Those with the three big conclusions from the latest Office for National Statistics data showing a sharper than expected drop in the annual consumer prices index measure of inflation from 10.5% in December to 10.1% in January. Prices normally fall in the first month of the year due to post-Christmas sales, but the drop was larger in January 2023 than in January 2022.