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Economy

UK inflation hits two-year low in January

The Consumer Prices Index (CPI) 12-month rate fell to 1.8% in January 2019, down from 2.1% in December 2018, according to the latest figures from the ONS.

This fell below the Bank of England’s inflation target of 2% for the month, with the Retail Prices Index (RPI) also decreasing to 2.5% in January, compared with 2.7% in December.

The largest downward contribution to the change in the 12-month rate came from electricity, gas and other fuels, with prices overall falling between December 2018 and January 2019 compared with price rises the same time a year ago.

According to the group, these downward effects were partially offset by air fares, with prices falling between December 2018 and January 2019 by less than a year ago.

Mike Hardie, ONS head of inflation, said: “The fall in inflation is due mainly to cheaper gas, electricity and petrol, partly offset by rising ferry ticket prices and airfares falling more slowly than this time last year.”

However, shop price inflation increased to 0.4% during the month, up from 0.3% in December 2018 – the fourth consecutive month of price increases and the highest inflation rate since April 2013.

According to the figures from the BRC-Nielsen shop price index, non-food deflation continued to decelerate, with prices falling by 0.3% in January, compared with the 0.4% decline in December. This is the lowest rate of deflation since March 2013.

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