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UK inflation stuck at 2.7% for record four months

UK inflation stuck at 2.7% for record four months

UK inflation remained stuck at 2.7% in January.

It was the fourth consecutive month consumer price inflation (CPI) was on this level, with sharp rises in alcohol and tobacco prices offset by slower increases in clothing.

Analysts had expected CPI to rise to 2.8% and it has now remained unchanged for the longest stretch since the CPI was first recorded in 1996.

Meanwhile the Retail Price Index (RPI) jumped from 3.1% in December to 3.3%.

Kames Capital joint head of fixed income and manager of the firm's Inflation Linked fund, Stephen Jones, drew little comfort from the data.

‘The stability in the UK Consumer Prices Index, reported today as rising at 2.7% year on year for the fourth month in a row, perhaps masks the fact that despite weak demand and levels of economic activity in the UK economy, inflation remains stubbornly high and above the desired target rate,' Jones said.  

‘Indeed, the Bank of England acknowledged only last week in its post monetary policy committee meeting statement, that inflation would likely remain above target over the medium term. '

Jones was also concerned by the rise in RPI, which was higher than expected.   

‘Both sets of inflation data are running at higher levels than pay increases and reflect a continuing squeeze on households and businesses who don’t have pricing power in the weak demand environment,' he said.

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