Technical analysis & fundamentals
Following a surprise drop in December 2024, data shows that CPI rose by 3% in the 12 months leading up to January 2025, compared to 2.5% in the 12 months leading up to December 2024. On a monthly basis, CPI fell by 0.1% in January 2025, compared to a 0.6% fall in January 2024.
This was an unexpectedly large jump in both the Headline and Core numbers. The ONS says that the biggest contributors to the increases were transportation, food, and beverage costs. Sterling shot higher initially, but quickly gave up these gains and is now little-changed this morning.
Today’s hotter-than-expected numbers will make it harder for the Bank of England to cut rates further. However, markets have been expecting a pause in monetary easing following the Bank’s 25 basis point cut earlier this month. So, now it’s a question of how long that pause may be, and can we expect inflation to continue to trend higher from here?
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