Interactive Investor

UK inflation rate unchanged

No change in the headline rate is good news, but the path back to normal remains a winding one, says Myron Jobson.

14th February 2024 07:44

Myron Jobson from interactive investor

No change in the headline inflation rate is actually good news as it was expected to rise. It is important to remember that CPI inflation is an annual measure, meaning that uneven month-to-month reports are expected even though inflation continues to trend down.

A lot of the heat in today’s inflation data came from energy costs, which ticked higher on an annual basis due to the increase in the energy price cap, and the price of second-hand cars raced higher for the first time since May 2023. These were offset by the continued moderation in the prices of food, an area where the cost-of-living squeeze is felt most, and the cost of furniture and household goods.

However, inflation is displaying worrying staying power after stripping out volatile food and energy costs, with core inflation remaining unchanged at 5.1% for the third month in a row. This serves as a stark reminder that the road back to normal remains a bumpy process.

Optimism over the outlook for inflation remains. For many, the cost-of-living burden on their finances doesn’t feel as acute because of a growth in wages, which now outstrips the rate of inflation, on average. But many workers haven’t been so fortunate and continue to be weighed down by elevated costs – especially when it comes to food and energy.

It remains important to keep a keen eye on your finances and make adjustments if needed to maintain financial resilience. Remember, we all have a personal inflation number that is unique to us and it could be far higher than the catch-all headline figure.

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