London Daily

Focus on the big picture.

Signs of hope on inflation despite slow price falls

Signs of hope on inflation despite slow price falls

City Comment: There are good reasons to think the worst of the inflation firestorm may well be over
The inflation supertanker can seem agonisingly slow to turn.

Another slight fall in the annual CPI rate to 10.1% in January is progress for sure but the headline figure is a mere percentage point below the October peak.

And at the supermarket checkouts and in the energy bills coming in for January the cost-of-living crisis feels as intense as ever.

Yet there are good reasons to think the worst of the firestorm may well be over as winter turns to spring. Prices actually fell 0.6% in January and core inflation, stripping out food and energy prices, was far better than expected by the markets at an annual rate of 5.8%, down from 6.3% in December.

Looking at the energy markets that lit the inflation fuse there are more reasons to be optimistic. The wholesale gas contract price for March dipped below 130p a therm yesterday for the first time since December 2021.

Although it is still well above the 50p level that was typical before the pandemic, the direction of travel remains encouraging. Domestic energy tariffs will rise again in April — although they will be capped by the Government’s £3,000 energy price guarantee — but after that they should start falling away.

With inflation still running at five times the Bank of England’s target rate it seems reasonable to assume — as the markets have — that one last rate rise, probably of a quarter point, is on the cards for March.

When Jeremy Hunt got the call to 11 Downing Street last autumn it was against a backdrop of chaos that had continued almost without a break for six years.

But barring another bolt-from-the-blue disaster it does appear that the economy is heading for calmer waters — business is finally getting the stability it has craved for so long.

It will allow the Chancellor to sound a more cheery note than he might have dared hoped for when he stands up to deliver his Budget a month from today
Newsletter

Related Articles

London Daily
0:00
0:00
Close
Russia's Electronic Warfare Neutralizes Western Weapons in Ukraine
Trump Challenges Biden to Debate and Golf Match
Macron Accuses Israeli Minister of Election Interference
US Senator Highlights Weaknesses in Western Military Industry During Ukraine Conflict
George Clooney Urges Biden to Withdraw from Presidential Race
Political Shift in the UK: A Detailed Analysis of Labour's Victory and Future Prospects
Viktor Orbán's Peace Mission: A Diplomatic Controversy in the EU
India Advocates Peace and Prosperity: PM Modi's Speech in Austria
New UK PM Keir Starmer Reaffirms Strong Support for Ukraine at NATO Summit
Spain PM Pedro Sanchez Denounces Double Standards on Gaza at NATO Summit
UK Police Arrest Suspect in Crossbow Attack After Three Women Killed
Sunita Williams Safe on ISS, to Address Earth on July 10
Biden Affirms Commitment To Presidential Race
France Faces Political Turmoil and Airport Strikes Ahead of Paris Olympics 2024
Putin Hosts PM Modi for a Private Meeting
TSMC: The Taiwanese Chip Giant Valued Over $1 Trillion
Boeing Pleads Guilty Over 737 MAX Crashes
2024 Predicted to Be World's Hottest Year
Iran's President-Elect Masoud Pezeshkian Reiterates Support for Hezbollah
White House Denies Biden Being Treated for Parkinson's Disease
Biden to Meet New UK Prime Minister Keir Starmer
Biden Insists on Continuing Presidential Race Amid Criticism
UK Defence Minister Pledges Enhanced Support to Ukraine
French Prime Minister Gabriel Attal Resigns After Election Setback
Macron Faces New Political Challenges Despite Election Relief
France's Far-Right Falls Short in Parliamentary Elections
Key Figures in France's Left-Wing New Popular Front Bloc
England Reaches Euro 2024 Semifinals After Penalty Shootout Win
Rishi Sunak Apologizes After Historic Tory Defeat
Voter Discontent in Recent UK and French Elections
Trump was recorded attacking Biden: "I kicked the old pile of shit"
Understanding the MRP Method in UK Elections
US Officials Resign Over Biden's Gaza Policy
First-Time Immigrant Voters Aim to Influence UK Elections 2024
Reform UK Receives Major Donations from Brexit Campaign Group
Tata Steel Strike Called Off, Paving the Way for Crucial Talks
Sir Keir Starmer's Acceptance of Substantial Gifts from UK Donors
New Zealand Introduces Law to Make Tech Giants Pay for News
NASA Astronauts Stranded in Space Due to Boeing's Starliner Issues
OpenAI and Microsoft Sued for Copyright Infringement
Starmer Vows to Renegotiate Brexit Deal Amid Far-Right Rise in France
Monster Hurricane Beryl Hits Caribbean as Category Five Storm
EU Charges Meta with Breaching Antitrust Rules
Biden's Debate Performance Unites Democrats and Republicans
Prison Officer Faces Court Over Inmate Sex Video
Jude Bellingham's Iconic Euro 2024 Goal: A Historic Moment for England
Campaigners Push for Emergency Uplift Visa for Palestinians Escaping Gaza Conflict
French Elections: Battle to Thwart Far-Right Takeover
Supreme Court Grants Trump Partial Immunity, Delays Trial
China Criticizes US Restrictions on AI Investments
×