- Prior +2.5%
- Core CPI +3.7% vs +3.7% y/y expected
- Prior +3.2%
The December report was plagued by a steep drop in prices for airfares, as noted at the time here. A strong rebound there is one of the causes for the hotter report in January. Besides that, the introduction of VAT on private school fees was material, leading to a 12.7% monthly increase there. The annual inflation rate for education was marked up to 7.5% as such, up from 5.0% in December.
Adding to that, services inflation (in core terms) is also seen up to 5.0% from 4.4% previously. So, that will be a headache for the BOE when taking the numbers at face value here.
The only bright side is that the monthly changes to both headline and core inflation were negative. Headline monthly inflation was seen down 0.1% while core monthly inflation was seen down 0.4%. That owed much to a fall in both housing and household services.