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Inflation falls to 10.1%

ended 15. February 2023

Inflation fell to 10.1% in January, faster than economists had predicted. Please answer any or all of the following Qs:

  • Could this mean the Bank of England may keep rates on hold at the next MPC meeting?
  • What does today's inflation data mean for borrowers?
  • What does it mean for savers?
  • What does it mean for investors?

5 responses from the Newspage community

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Philip Dragoumis
Director and Owner at Thera Wealth Management
Prices fell in January by 0.6% month on month. Taking the last three months together and annualising them, you get inflation dropping sharply to 2.4% this year. This is great news for consumers, for borrowers and for investors in UK government bonds. The Bank of England should now pause its hiking spree and await further data. It's fair to say that inflation in the UK has now peaked.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
Inflation coming down faster than expected means it’s slightly less likely the central bank will hike rates by 0.5% next month, although that’s still the most accepted direction of travel. Inflation should nosedive in a few months and even be back down to the 2% target by the end of the year so bank rate cuts are coming. The sensible thing for the Monetary Policy Committee to do now would be to pause and take a breath, and release the thumb screws that are inflicting so much pain on homeowners.
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Rhys Schofield
Brand Director at Peak Mortgages and Protection
Inflation is definitely falling as the global issues such as high fuel prices caused by Putin have subsided so inflicting further financial pain on households is a bit pointless. However, pointless or not the Bank of England has to be seen to be acting tough lest the markets get spooked so it may be forced to do something and raise rates again. All that being said, with inflation on the wane, and base rate not looking likely to peak as high as had been feared, mortgage fixed rates have steadily been coming down over the coming months anyway.
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Mark Grant
Business Finance Adviser at The Business Finance Branch
While it still means prices are rising at 10.1% year on year, a lower figure than last month and a bigger fall than predicted is good for business sentiment and confidence in the months ahead. It may well reinforce the Bank of England's forecast that we are at or near the top of the interest rate-raising cycle. Businesses need the confidence to invest and hire staff and this improving inflation figure - while still high - could contribute to that.
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Vishal Vyas
Independent Mortgage Adviser at Private Finance
Positive news with inflation falling for the third month in a row, down to 10.1% from the peak in October. I believe the Bank of England will continue with another base rate increase at the next MPC meeting in March but hopefully this may now be a smaller increase, rather than 0.5%. The Bank of England will want to continue the downward trend towards the 2% inflation target and will not want to be seen to be taking their foot off the gas too early for inflation to begin increasing again and further drastic rises to then be enforced. Swap rates are still relatively stable, meaning lending markets remain competitive for borrowers. Two areas of concern are the housing and bills and food and drinks categories, which are up by 26.7% and 16.7% respectively, but hopefully this will improve in the coming months to further drive down inflation.