UK inflation rate dips for third straight month to hit 10.1%

LONDON — The U.K. inflation rate fell for the third month in a row in January to hit 10.1%, below economists’ expectations, but high food and energy prices continued to put the pressure on British households.

Economists polled by Reuters had forecast inflation would drop to 10.3% after the rate fell to 10.5% for December. Inflation has fallen consistently since hitting a 41-year-high of 11.1% in October.

Core CPI, which doesn’t include food, energy, alcohol or tobacco, was 5.3% compared to 5.8% in December, according to the ONS.

The agency said the largest upward contribution came from housing, gas and electricity, food and non-alcoholic beverages, while the biggest price drops were in transport and restaurants and hotels.

Inflation rates spiked throughout 2022, largely due to surging energy prices in response to Russia’s invasion of Ukraine impacting oil and gas supplies.

The Bank of England raised interest rates by 50 basis points on Feb. 2 and forecast a “much shallower” recession than previously feared.

The central bank moved its main rate to 4% and anticipated annual CPI inflation would fall to 4% by the end of 2023.

Worker pay continues to lag behind inflation, with growth in average total pay at 5.9% among U.K. employees between October and December year-on-year, the ONS reported Tuesday.

This is a breaking news story, please check back later for more.