UK Inflation Falls 0.3% to 10.2% US Inflation Only Falls 0.1%

Published / Last Updated on 15/02/2023

The Office for National Statistics (ONS) released CPI inflation figures this morning for January 2023 at 10.2% pa, down 0.3% pa from 10.5% pa in December 2022.  A 0.3% fall was slightly more than expected.  Housing and household services (mainly from electricity, gas, and other fuels), and food and non-alcoholic beverages costs were still the main culprits for high inflation, but the downward pressure came from transport (particularly passenger transport and motor fuels), restaurants and hotels, with lower price prices in alcoholic beverages and tobacco making the largest downward contribution.

Consumer Prices Index (CPI)

UK Consumer Prices Index (CPI) is still double digit at 10.2% pa (January 2023) down from 10.5% pa (December 2022), 10.7% pa (November 2022) and 11.1% pa (October 2022) to).  The speed of inflation falls is up slightly but is not a big enough fall when compared to USA inflation now at 6.4% pa (the Federal Reserve has been more aggressive with interest rates) and so we do expect further Bank of England interest rate rises on 22nd March 2023.  That said, we will see as we will have seen another round of inflation figures for February on 22nd March, the day before the next Monetary Policy Committee announcement on interest rates.

Old Inflation Measure - Retail Prices Index (RPI)

The old measure of inflation RPI, an arithmetical mean of the average prices of a basket of household spending (rather than the geometric mean for CPI), remained the same high at 13.4% pa for January 2023 as it was for December 2022 but better than 41-year highs of 14.2% pa (October 2022) and 14.0% (November 2022).  No progress in January as it remained the same so we have a long way to go, and this may only add to more pressure to increase interest rates again.

US Inflation

Meanwhile, ‘on the other side of the pond’, the annual inflation rate in the US slowed only slightly to 6.4% in January 2023 from 6.5% in December 2023, this was less than market forecasts of 6.2%.  It is still the lowest level since October 2021 but concerns for just a 0.1% fall may impact with further US interest rate increases and stock market falls.


We have suggested many times that this period of high inflation could be around for another 5 years despite the Bank of England suggesting we will back on target within 2 years.  Never forget, a period of high inflation devalues fixed rate government debt (gilts) over the years meaning that when the government comes to repay its covid-19 and cost of living support debts, their real-time cost is lower, just like an interest only mortgage if you are paying off the original mortgage capital amount, taken out 25 years ago.

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