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U.K. inflation rate continued its gradual descent in January, posting its third decline in as many months, but remained in double digits as fuel prices moderated.
Consumer prices increased 10.1% in January compared with the same month a year earlier, easing from December’s 10.5% on-year rise and from October’s 41-year high of 11.1%, data from the Office for National Statistics showed Wednesday.
Economists expected inflation to decline to 10.3%, according to a poll by The Wall Street Journal.
Lower gasoline prices contributed to the fall in inflation, the ONS said. Food inflation stood at 16.7%, broadly unchanged from the 16.8% on-year increase registered in December.
Core consumer prices–a measure that excludes the volatile categories of food and energy–rose 5.8% in January, down from a 6.3% increase in December, suggesting underlying prices pressures are abating.
U.K. inflation is expected to fall quickly this year as the energy-price shock seen in 2022 fades, but strong wage growth amid a tight labor market is likely to keep fueling price pressures, economists say.
The Bank of England expects annual inflation to fall to around 4% toward the end of the year. On Feb. 2, the central bank raised interest rates by 50 basis points to 4.00%, and signaled it might soon pause its interest-rate hiking cycle amid signs that inflation is easing and economic growth is softening.
Write to Xavier Fontdegloria at xavier.fontdegloria@wsj.com
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