A surprise development in the UK's inflation rate occurred in January, as the consumer prices index (CPI) remained unchanged at 4%, despite food prices decreasing for the first time since September 2021.
The ONS revealed that a decrease of 0.4% occurred in food prices last month primarily because of reduced costs for bread, cereals, cream crackers, and chocolate biscuits.
Food and non-alcoholic beverage prices have risen by 7% since last year, but their increase has noticeably moderated since April 2022.
The ONS stated that seven out of 11 types of food and non-alcoholic beverages contributed to a decrease in the overall inflation figure for the month.
Food and non-alcoholic drinks are now 25% pricier than they were before, with recent price increases notwithstanding.
In the ten years preceding this period, prices typically rose by approximately 10%.
ONS Chief Economist Grant Fitzner commented on the situation by stating that inflation remained stable in January due to counteracting effects within various components of the basket of goods and services.
Rachel Reeves, the Shadow Chancellor, expressed concern over the continued economic struggle faced by working people.
"After 14 years of economic failure, working people are worse off. Prices are still rising in the shops, with the average household's costs up £110 a week compared to before the last election."- Rachel Reeves, shadow chancellor
She stated that prices were still rising in shops, with an average household's costs increasing by £110 per week compared to before the last election.
According to an early projection from the Bank of England, there would be a minor uptick in inflation levels during January. Economists surveyed by Reuters believed that this increase would measure up to 4.2%.
"We continue to think that CPI outturns over the coming months will convince the (Bank's Monetary Policy Committee) in the second quarter that monetary policy does not need to be quite as restrictive." - Samuel Tombs, chief UK
economist at Pantheon Macroeconomics
The unexpectedly low inflation figure might lead the Bank to reconsider its decisions regarding interest rates in the coming months.
This shift in the economic landscape could potentially pave the way for cuts in borrowing costs later this year, providing some relief to households dealing with high living costs.