CPI falls to 18% but remains above target

The Consumer Price Index (CPI) rose by 18% in the year to January 2024, down from 19% in December 2023. The largest upward pressure came from food and non-alcoholic beverages, which rose by 20%. The Bank of England's Monetary Policy Committee (MPC) sets monetary policy to meet the 2% inflation target. The MPC raised interest rates by 50 basis points to 4% in February 2023, and is expected to raise rates further in the coming months. The MPC's decision to raise interest rates is designed to reduce inflation by making it more expensive for businesses to borrow money and invest. This, in turn, should lead to lower prices for consumers. However, raising interest rates can also have negative consequences for the economy, such as slower growth and higher unemployment. The MPC must therefore carefully weigh the risks and benefits of raising interest rates when making its decision.

Headline measures of consumer price inflation

• The CPI all goods index rose by 18% in the year to January 2024 down from 19 in December 2023.
• The CPI excluding owner occupiers' housing costs index rose by 17.3% in the year to January 2024 down from 18 in December 2023.
• The CPI excluding food and energy rose by 16.3% in the year to January 2024 down from 16.5 in December 2023.
• The CPI including owner occupiers' housing costs index rose by 17.1% in the year to January 2024 down from 17.5 in December 2023.

CPI 12-month inflation rates

• Food and non-alcoholic beverages: 20.1%

• Housing, water, electricity, gas, and other fuels: 17.7%

• Transport: 13.8%

• Recreation and culture: 10.2%

• Restaurants and hotels: 9.0%

• Alcoholic beverages and tobacco: 6.3%

• Clothing and footwear: 6.2%

• Health: 4.3%

• Communication: 2.3%

• Education: 1.7%