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UK inflation 'expected to ease' UK inflation rate lower at 2.7%
(10 minutes later)
Economists are expecting Britain's inflation to have eased slightly in January, after a jump in the rate to an 11-year high in the previous month. Britain's inflation rates eased slightly in January after jumping to an 11-year high in the previous month.
The Consumer Prices Index is expected to dip to 2.9% from 3%, when official figures are published on Tuesday. The Consumer Prices Index dropped to 2.7% from 3%, according to the Office for National Statistics.
The Bank of England has raised interest rates three times since August in a bid to bring inflation down to a 2% target.The Bank of England has raised interest rates three times since August in a bid to bring inflation down to a 2% target.
Price pressures could ease this year as fuel costs fall, but many analysts believe a further rate rise is likely. Price pressures could ease this year as fuel costs fall. However, many analysts believe that a further rate rise is likely in the next three months.
'Concerns''Concerns'
"With inflation likely to remain high through the first quarter, and the Monetary Policy Committee (MPC) sensitive to the upside risks to its inflation objective, our forecast anticipates a further move upward in interest rates at one of the next two meetings," said JP Morgan economist Malcolm Barr."With inflation likely to remain high through the first quarter, and the Monetary Policy Committee (MPC) sensitive to the upside risks to its inflation objective, our forecast anticipates a further move upward in interest rates at one of the next two meetings," said JP Morgan economist Malcolm Barr.
A further rise in inflation to a rate above 3% would require Bank of England Governor Mervyn King to write a letter to the government explaining the reasons behind the increase.A further rise in inflation to a rate above 3% would require Bank of England Governor Mervyn King to write a letter to the government explaining the reasons behind the increase.
The news should soothe some of the MPC's concerns Philip Shaw, chief economist, Investec Securities Personal impact of inflation The news should soothe some of the MPC's concerns Philip Shaw, chief economist, Investec Securities Personal impact of inflation class="" href="/1/hi/business/6356475.stm">Inflation Q&A
No governor has so far had to do so since the Bank was given control of setting interest rates a decade ago.No governor has so far had to do so since the Bank was given control of setting interest rates a decade ago.
December's increase in consumer price inflation was mirrored by a rise in the Retail Prices Index - which includes mortgage interest payments and is often used as a basis for wage demands - to 4.4%, its highest level since 1991.December's increase in consumer price inflation was mirrored by a rise in the Retail Prices Index - which includes mortgage interest payments and is often used as a basis for wage demands - to 4.4%, its highest level since 1991.
Philip Shaw, chief economist with Investec Securities said he expected the inflation numbers to be a relief for Mr King.Philip Shaw, chief economist with Investec Securities said he expected the inflation numbers to be a relief for Mr King.
"The news should soothe some of the MPC's concerns," he said."The news should soothe some of the MPC's concerns," he said.
But he added that seasonal food prices were tipped to be higher last month. and reductions on clothing and footwear were less dramatic than they had been in the sales a year earlier.But he added that seasonal food prices were tipped to be higher last month. and reductions on clothing and footwear were less dramatic than they had been in the sales a year earlier.
Mr Shaw said he though inflation would remain "uncomfortably high" until March, when the impact of energy prices would be seen.Mr Shaw said he though inflation would remain "uncomfortably high" until March, when the impact of energy prices would be seen.