Inflation set to have dropped to 2% after January peak as energy prices fall  


Inflation set to have dropped to 2% after January peak as energy prices fall, easing pressure on UK households

Helen Cahill For Mail On Sunday

Dropped: Petrol prices fell in January, helping to ease budgets for UK motorists

Dropped: Petrol prices fell in January, helping to ease budgets for UK motorists

Dropped: Petrol prices fell in January, helping to ease budgets for UK motorists

Inflation dropped to 2 per cent last month as falling energy prices eased the pressure on household budgets, official figures are expected to show this week.

Petrol prices fell in January, while a price cap on standard variable energy tariffs kept household bills down.

Economists said that had helped to push inflation on the Consumer Prices Index back to the Bank of England’s official 2 per cent target.

Inflation fell throughout 2018 after peaking at 3 per cent in January.

But the respite may not last long, experts warn. 

Last week’s announcement that the energy price cap will rise by close to 10 per cent could reverse the trend.

The nature of Brexit could be key. Capital Economics has forecast a 10 per cent rise in sterling if Theresa May secures a deal with European partners.

But the consultancy added that if the UK leaves the European Union without a deal, sterling could plunge 8 per cent – and that would push inflation back towards 3 per cent in 2020 as businesses pass on rising import costs to consumers.

 



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