UK inflation fell for the third straight month to 10.1% as falling air fares and fuel costs drove a bigger-than-expected fall in January, the Office for National Statistics (ONS) said today.
The ONS said Consumer Prices Index (CPI) inflation dropped from 10.5% in December. Many economists had been expecting a drop to 10.3% last month.
Grant Fitzner, chief economist for the ONS, said: "Although still at a high level, inflation eased again in January.
"This was driven by the price of air and coach travel dropping back after last month’s steep rise.
READ MORE: Retail sector's 'fragile recovery' boosted by January sales
"Petrol prices continue to fall and there was a dip in restaurant, cafe and takeaway prices.
"The cost of furniture decreased by more than this time last year, in line with traditional New Year discounting. These were offset by rising prices for alcohol and tobacco, following on from seasonal price cuts in December and a more subdued rise at the same time last year."
He added: "There are further indications that costs facing businesses are rising more slowly, driven by falls in crude oil, electricity and petroleum prices.
"However, business prices remain high overall, particularly for steel and food products."
Chancellor Jeremy Hunt said: “While any fall in inflation is welcome, the fight is far from over.
“High inflation strangles growth and causes pain for families and businesses – that’s why we must stick to the plan halve inflation this year, reduce debt and grow the economy.”
Shadow chancellor Rachel Reeves repeated Labour’s call for a windfall tax on oil and gas companies to ease bills.
She said: “With inflation still close to a 40-year high, people will be asking if 13 years of Tory Government has left them and their family feeling better off? The answer will be no.
“Despite Britain’s enormous potential, in April households will be hit by another economic blow when energy prices go up.
“Labour would be bringing in a proper windfall tax on oil and gas giants now to stop energy bills going up in April.
“Our long-term plan to sprint to clean power and insulate 19 million homes will keep bills low for the future too, and get our economy growing.”
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