Inflation going nowhere at 2.7%

By Michael Northcott Tuesday, 12 February 2013

We're really struggling to get inflation down to the target of 2%, as the latest ONS stats reveal that inflation In January stood still for the fourth month in a row.

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Again, sorry we can’t bring you any metrics that will make you jump for joy, but the Office for National Statistics just won’t throw us a bone. The latest figures show that the annual consumer price index for inflation held steady at 2.7%, marking the first time that inflation has stood still for four consecutive months since 1996 – when records began.

The most significant factor pushing up CPI was alcohol and tobacco prices, which jumped 4.3% from December to January thanks to the expiry of a bunch of Christmas discounts. Pushing the metric down was clothing and footwear, a segment in which prices dropped by a massive 5.4% - the inverse of the fags and booze factor, clothes come down in price for the January sales.

Still, the retail prices index (RPI), which takes account of things like council tax and fluctuations in the interest rate on mortgages, rose to 3.3% in January compared with 3.1% in December.

A spokesperson for the Treasury said: ‘Inflation is down by almost a half from its peak of 5.2%. The Government has taken continued action to help with the cost of living, by announcing a further increase in the tax-free personal allowance and freezing fuel duty for more than two years.’

But with a bunch of energy price rises on the way, no amount of smooth rhetoric from the Treasury will keep heating from playing with that inflation rate…