Nearly 250 savings accounts match inflation after inflation fall

Good morning: Did inflation fall below the Bank of England's 2 per cent target in January?

Before last month, the last time a one-year fixed-rate matched inflation was November 2016, and back then the CPI was only 1.2 per cent.

The biggest ever monthly fall in gas prices since comparable records began in 1988 coincided with the start of energy regulator Ofgem's cap on household bills.

"The return of inflation to below the 2% target for the first time in two years is welcome news for households, but a further substantial fall isn't likely", says Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics. Consumer inflation in December was revised downwards to 2.11 per cent from 2.19 per cent, according to the official statement.

The Consumer Food Price Index declined to 2.17% in January. The inflation rate for services like education and health also fell, bringing down the level of core inflation, after excluding volatile items like food and fuel.

We'll have a report on the economic data (and the market reaction)... Factory output growth in the previous month was revised downwards to 0.3 per cent, from 0.5 per cent previously.

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"The further falling back in inflation facilitates the Bank of England maintaining a "wait and see" approach on interest rates until after the United Kingdom leaves the EU", Howard Archer, chief economic adviser to the EY ITEM Club consultancy, said.

Brexit pandemonium in parliament and uncertainty over the shape of the UK's future relationship with the European Union is the only thing keeping the Bank of England from raising rates again, most economists say, given the United Kingdom is due to depart the EU on March 29.

"The implication is that second round effects are much more muted, and shocks to food and fuel prices do not propagate as strongly into core inflation", JPMorgan economists Sajjid Chinoy and Toshi Jain wrote in a recent note.

"Of course if we get a cliff-edge, no deal Brexit, all bets are off - a drop in sterling would likely see a sharp rise in imported inflation, but I'd expect the Bank to look through this and cut rates to support the economy".

"Our suspicion is that inflation will spike significantly higher if the United Kingdom leaves the European Union without a deal".

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