PwC comments on the CPI figures for January 2025

Commenting on the Office of National Statistics Consumer Price Index for January 2025, Adam Deasy, Economist at PwC, comments:

“After a surprise drop last month, inflation is back on the up. Headline CPI came in at 3.0% for January 2025, its highest level for 10 months and up from 2.5% at the end of 2024. Some of the key drivers were predictable, such as the imposition of VAT on private school fees driving up the education component, but this reading still comes in higher than consensus expectations of 2.8%. Transport and food prices were the largest upward contributors. 

“Services inflation is back in the spotlight, rising to 5.0% after falling in December. Largely to blame are volatile components like airfares, which saw unusually small January drops after weaker growth in the festive period. However, goods inflation increasing to its highest level since February 2024, off the back of wage growth coming in hot yesterday, is an unwelcome reminder that inflationary pressures persist across the economy.

“Although the rise in prices won’t make for pleasant reading, the Bank of England saw this coming to some extent. The February MPC report set out their expectation of services inflation coming in just above 5% for January and the prospect of further rises will reinforce their stance on loosening monetary policy ‘gradually and carefully’. It all comes down to timing, and a March cut is likely a touch too soon—today’s inflation print is a speed bump in the road to lower rates.” 

ENDS