The figure is down from the previous month, but consumers are not out of the woods yet.
Commenting, Myron Jobson, Senior Finance Analyst, interactive investor, says: “Inflation has continued its slow grind lower to 10.1% in January, down from 10.5% the previous month. It doesn’t mean that Britons will suddenly find that the costs of good and services are getting cheaper. It just means that prices aren’t rising as fast.
“The continued dip in fuel prices remains a key contributor to the fall of the headline inflation figure, but high food and energy prices continued to put the pressure on British households. These types of inflation are sticky because we are resigned to paying it as they form part of essential expenditure for many.
“While inflation appears to have turned a corner and begun to fall a little, prices are still rising at a higher than usual rate. And with wage growth still failing to keep pace with inflation, on average, money does not buy the same amount of goods and services that it did last year because of the erosion of purchasing power.
“With inflation remaining stubbornly high, the Bank of England could take the view that continued interest rate hikes might still be necessary to rein it in. Higher interest rates increase the cost of borrowing for things such as cars, loans and mortgages. The toxic mix of rising prices, rising borrowing costs and failing incomes in real terms threatens to batter household finances for some time to come.
“We are all feeling the effects of high inflation – the extent of which depends on how we spend our money. We all have our own inflation number, and it is worth keeping tabs on your spending habits to get a better idea of the goods and services that are eating most into your budget, and where you could cut back as the cost of living continues to rise. Look at what makes sense for you – not an arbitrary measurement from anyone else.”
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