The rate of inflation unexpectedly stayed the same at 4.0% last month.
The headline measure of annual inflation - the Consumer Prices Index (CPI) - was unchanged in January, according to the Office for National Statistics (ONS).
City forecasters had been predicting a rose to 4.1 or 4.2% so the better than expected figure will boost hopes of an interest rate cut in May or June.
Members of the Bank’s Monetary Policy Committee (MPC) will take a particularly close look at the trend on core inflation, which was flat at 5.1%, and services CPI, which went up, from 6.4% to 6.5%.
Today’s inflation figure follows wages data today showing pay rising a higher than expected annual rate of 6.2% in the last quarter of the year. It also comes after US inflation fell less than expected in January from 3.4% to 3.1%, compared with a forecast 2.9%.
ONS Chief Economist Grant Fitzner said:“Inflation was unchanged in January reflecting counteracting effects within the basket of goods and services.”
“The price of gas and electricity rose at a higher rate than this time last year due to the increase in the energy price cap, while the cost of second-hand cars went up for the first time since May.
“Offsetting these, prices of furniture and household goods decreased by more than a year ago and food prices fell on the month for the first time in over two years.”
“All of these factors combined resulted in no change to the headline rate this month.”
Chancellor of the Exchequer Jeremy Hunt said:“Inflation never falls in a perfect straight line, but the plan is working; we have made huge progress in bringing inflation down from 11%, and the Bank of England forecast that it will fall to around 2% in a matter of months.”
