The Office of National Statistics (ONS) has released the latest national inflation figures for January 2014.
On the Consumer side:
The 1.9% growth in Consumer Prices Index (CPI) in the year to January 2014, down from 2.0% in December 2013, is lower than the Government forecast target. The fall in the rate resulted from price movements for recreational goods and services, furniture and household goods and alcoholic beverages and tobacco. These were partially offset by price movements for miscellaneous goods and services. 1.8% growth in CPIH (H means that the costs of occupying a house are included) in the year to January 2014, is down from 1.9% in December 2013. RPIJ (The Retail Price Index) grew by 2.1%, up from 2.0% in December 2013.
Consumer Price Inflation is the speed at which the prices of goods and services bought by households rise or fall. Consumer price inflation is estimated by using price indices. One way to understand a price index is to think of a very large shopping basket containing all the goods and services bought by households. The price index estimates changes to the total cost of this basket. ONS consumer price indices are published monthly as are the producer price indices.
Producer Price Inflation measures the price changes of goods bought and sold by UK manufacturers and provides a key measure of inflation, using producer price indices of materials and fuels purchased and the output of the manufacturing industry by broad sector. Output price indices measure change in the prices of goods produced by UK manufacturers - often called 'factory gate prices'.
On the Producer side:
The output price index for goods produced by UK manufacturers rose 0.9% in the year to January 2014, compared with a rise of 1.0% in the year to December 2013 - a 0.1% rate reduction. Factory gate prices rose 0.3% between December 2013 and January 2014, compared with no movement between November and December. Core factory gate prices, which exclude the more volatile food, beverages, tobacco and petroleum products, rose 1.2% in the year to January 2014, compared with a rise of 1.0% in the year to December 2013. The overall price of materials and fuels bought by UK manufacturers for processing (total input prices), fell 3.1% in the year to January 2014, compared with a fall of 1.0% in the year to December 2013. Total input prices fell 0.9% between December 2013 and January 2014, compared with a rise of 0.2% between November and December.
Put all the figures together and we have an overall positive snapshot that supports the Bank of England's stated forecast of not putting the UK base interest rate up any time soon!