The office for National Statistics said that the CPI inflation rate remained at 4% in January, unchanged from December.
Economists had expected a slight increase to 4.2%, so this is a weaker reading than expected.
However, while inflation remains low from a 41-year high of 11.1% in October 2022 to below prime minister Rishi Sunak's stated target of 5% by the end of 2023, it is still above the Bank of England's long-term target of 2%.
Finance Minister Jeremy Hunt said that inflation never falls in a perfect straight line, but the government's plan has been successful so far, we have made tremendous progress in reducing inflation from 11%, and the Bank of England expects it to fall to about 2% within months.
The figures are slightly lower than the estimates but similar to the December readings. With the core inflation rate remaining stable above 5%, I don't think this will change much from the current expectations of the Bank of England, and the pound sterling fell against the US dollar immediately after the news was released from the levels of 1.2610 to 1.2570.
The probability of an interest rate cut in June was almost 40% at the time of the data release. I expect this to go up a bit but that doesn't reflect the aggressive pricing we saw before the BoE meeting earlier this month.
