The rise in prices for daily costs has remained stable with inflation at four percent for the year to January, the same as for the previous month.
This means the rate remains double the target set by the Bank of England, which wants to see inflation fall to two percent.
The largest increase in prices came from the rise in energy bills, with the energy price cap increasing by five percent from the start of January.
Alastair Douglas, CEO of TotallyMoney, said: “While inflation has dropped far below its 11% peak, the impact will be felt for years to come.
“The cost of living is now considerably higher than it was, and the poorest households have been hit the hardest. Savings have been spent, and the Government is barely supporting those it’s supposed to serve.”
Inflation for food and non-alcohol drinks fell from eight percent in December to seven percent in January, owing in particular to bread and cereals, with prices falling 1.3 percent.
This was the largest monthly fall since May 2021, with prices dropping for cream crackers, sponge cake and chocolate biscuits, according to the ONS (Office for National Statistics).
The inflation rate for housing, water, electricity gas and other fuels was at 2.5 percent for January, up from 1.9 percent in December.
The unmoved overall inflation rate raises the question of when the Bank of England will start to lower the base interest rate, which it has previously been increasing in efforts to tackle inflation.
Andy Mielczarek, founder and CEO of SmartSave, saiud: “There’s still a considerable distance to cover before the Bank’s two percent inflation target is reached.
“At this time, those in a position to save lump sums should be proactive, capitalising on any potential advantages presented by the heightened base rate.
“The Bank of England’s next interest rates decision comes on 21 March, and all eyes will be firmly on how the battle against inflation shapes up over the intervening six weeks.”
Alice Haine, personal finance analyst at Bestinvest, said the latest figures may be a blow for mortgage holders hoping for interest rates cuts.
She said: “Mortgage rate cuts were the big story at the beginning of the year when lenders battled it out to retain their client base and attract fresh business.
“The market is more mixed now with some lenders upping mortgage rates over the past week as they react to the turbulent swap rate market, which can determine fixed-rate pricing.
“This can be confusing for first-time buyers nervous about dipping their toe into the market. They must consider whether now is the best time to push ahead with a purchase or wait for the mortgage market to ease further.”
Ms Haine said looking to remortgage also face difficulties given the current conditions. She explained: “While repayments on a new product are likely to be higher than their current deal, particularly for those emerging from three- and five-year deals secured before the Bank of England began its rapid rate-hiking cycle, deciding whether a fixed or variable rate is best and how long to lock in for can be tricky to assess.
“Consulting an independent mortgage broker will be key for those looking to secure the best deal they can in an uncertain market.”
Mohsin Rashid, CEO of rewards app ZIPZERO, said the sticky inflation figure was “adding insult to injury” for those hit by high interest rates.
He said: “A huge number of mortgage customers are holding out for interest rate cuts, but after today’s news, this feels like a distant notion.
“And while the Government may claim that the cost-of-living crisis is fading away, such a statement is far removed from the reality faced by millions across the UK – make no mistake, eye-watering grocery prices coupled with rising energy and mortgage payments will continue to plague households for months to come.
“As ever, struggling households are being hung out to dry by a Government that, come next Thursday, will have completed its final round of cost-of-living support payments and seems to think consumers’ financial problems are solved.
“In the coming months, shoppers will need to rely on penny-pinching and foregoing luxury in order to minimise the impact of yet another month of rampant inflation.”
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