New year, new inflation – CPI picks up to 3.0% in January from 2.5% in December, above BoE and market forecasts. Thread on what is driving this rise – and where this new bout of inflation is headed – to follow…
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In the thread, you mention the bus fare cap, air fares, private school fees & petrol prices amongst other things.
I know the headline figure is important - BoE use it when setting Base Rate etc, but to individuals it will probably be different (eg if you don’t send kids to private school).
A lot going on this month - the largest contributions to inflation came from transport where airfares bounced back (as expected) and petrol prices went up. But there were also upward contributions from energy (mainly VAT on fees) and higher food-price inflation.
Let's zoom in on inflation rates for some of those. Here you can see the effect of the rise in bus fare cap from £2 to £3 and the impact of VAT on private school fees. Airfares actually fell *less* than expected in Dec and bounced back by less than the usual amount in January.
Zooming out to contributions to the annual rate you can see the pattern of services driven inflation is still with us. BUT food price inflation jumped up sharply in January from 2% to 3.3%. The ONS report this rise was broad based. This is a worrying for lower-income families.
Although inflation isn’t anywhere near its recent double-digit levels, this chart reminds you that *prices* are still high, and rising. Since July 2021, prices are up 22%, energy is up 57%, and food is up 35%. This high cost of essentials hits lower-income families hardest.
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I know the headline figure is important - BoE use it when setting Base Rate etc, but to individuals it will probably be different (eg if you don’t send kids to private school).
Your graph shows petrol being more expensive than diesel, but on garage forecourts it’s consistently the other way around - and has been for years.
Labelling error? If not, can you break this into two graphs, showing the non-forecourt data separately?