How fast are prices rising in the UK?

Prices in the UK are no longer rising as fast as wages, official figures show. However, inflation of 4% in January was still significantly above the Bank of England#39;s target. This means knock-on effects for interest rates could be significant. Core inflation was 5.

1% in January, according to the Bank of England. This excludes the price of energy, food, alcohol and tobacco. Up to now soaring food and energy bills have been the main cause of high inflation. Oil and gas were in greater demand after Covid and prices also surged when Russia invaded Ukraine, cutting supplies.

Inflation hit 11. 1% in October 2022, the highest rate for 40 years. The Bank of England’s target is to keep inflation at 2%. With inflation remaining much higher than that, the Bank increased interest rates to 5.

25%. The theory is that by making borrowing more expensive, people will have less money. By increasing borrowing costs there is a risk of harming the economy. For example, homeowners face higher mortgage repayments.

Businesses also borrow less, making them less likely to create jobs. They are also encouraged to save more as saving rates increase. In turn, this reduces demand for goods and slows price rises. Pay, excluding bonuses, grew by 6.

2% in the last three months of 2023. Several industries, including rail, healthcare and education, have gone on strike over pay. The government has argued that big pay rises could push inflation higher because companies might increase prices as a result. Annual inflation rate for countries using the euro expected to be 2.

6%. In the US, inflation hit 3. 2% in February, up very slightly from 3. 1% in January.

The European Central Bank raised its key interest rate to a record high 4% in September.