**AS SEEN IN RISK IN THE WEEK REPORT 03/24/25, GET ACCESS NOW! CABLEFXM.CO.UK
In January, the headline CPI rose by 3.0%Y/y, up from 2.5% in December 2024. This increase marked the highest inflation rate since March 2024, when it stood at 3.4%, and exceeded market expectations of 2.8%. On a M/m basis, CPI fell by 0.1% in January 2025, compared to a larger drop of 0.6% in January 2024, indicating a less pronounced seasonal decline than the previous year.
The core CPI, which excludes volatile items like energy, food, alcohol, and tobacco, increased to 3.7% YoY in January 2025, up from 3.2% in December 2024. This matched analyst expectations of 3.7% and was the highest core rate since April 2024, reflecting persistent underlying price pressures. The monthly core CPI figure isn’t detailed in the ONS release, but the annual uptick suggests broader inflationary momentum beyond seasonal or volatile components.
Analysts at Rabobank said that the BoE noted January's CPI inflation rise to 3.0 was slightly above their expectations from the previous month.
They said that the increase was driven by higher prices in core consumer goods and food, which more than offset minor declines in services prices. Rabo warned that CPI inflation is nonetheless expected to climb to around 3.75% by autumn, largely due to higher energy costs. While the MPC anticipates inflation will decline thereafter, Rabo said they are cautious about labelling this year's rise in headline inflation as 'transitory.' This is also due to the recent increase in household and businesses’ inflation expectations.
Comments