Increased inflation due to food and household products prices
According to the National Bureau of Statistics, UK inflation rate rose to 0.7% in January, up from 0.6% in the previous month.
The rise in prices of food and household goods contributed to rising inflation measured by the consumer price index.
“We are accused of economic statistics at ONS,” said Jonathan Atow.
“Home products also pushed prices up this year with fewer discounts on items such as bedding and settes. However, sales in January have wider sales, particularly for clothing and footwear.”
Inflation has been below the Bank of England’s 2% target for some time, but analysts are predicting a return to the benchmark in the near future.
“In the short term, inflation is rapidly coming towards the Bank of England’s 2% target in the coming months as large energy prices for spring 2020 begin to be wrapped with fresh data and temporary VAT cuts for hospitality. It’s pretty glued to the rise. Laith Khalaf, financial analyst at AJ Bell, said:
“It all coincides with the anticipated current lockdown lift when price collection begins to more accurately reflect normal activities,” Khalaf continued.
Experts have the opposite view on the possibility that inflation could surpass the Bank of England target by 2% before 2021.
“The slight increase in CPI inflation in January is the first step to reach a rate that exceeds target by fall this year,” said Samuel Toums, chief economist at Pantheon Economics.
Meanwhile, Yael Selfin, chief economist at KPMG UK, said, “It is unlikely that overall inflation will exceed the Bank of England’s 2% target, reaching 1.7% in 2021 and 1.9% in 2022. It is proficiency and allows for a long period of low interest rates. Economic recovery.”
According to Russ Mold, AJ Bell’s investment director, the impact on the FTSE 100 is still difficult to identify.
“The FTSE 100 began modestly on the hind legs on Wednesday after UK inflation numbers were difficult to consume concrete,” Mold said.
The market responded overnight as investors tried to protect themselves from rising prices.
“The US Treasury surge shows that inflation controls investors’ thinking, as they seek higher rates to hold “safe” assets like government bonds.” Las Mold said.
