The Consumer Prices Index (CPI) rose by 10.1% in the 12 months to January 2023, down from 10.5% in December 2022 and from a peak of 11.1% in October 2022, data released by Office for National Statistics (ONS) showed on Wednesday.
As per media reports, economists had had forecasted that the annual CPI rate would drop to 10.3% in January.
The slowing in the CPI rate between December 2022 and January 2023 was a result of CPI prices falling 0.6% in the month to January 2023, compared with a smaller fall of 0.1% the year before, the ONS said.
The easing in the annual inflation rate in January 2023 mainly reflected price changes in the transport division (3.1% as against 6.5%), particularly for passenger transport and motor fuels. There were also downward effects from restaurants and hotels (10.8% as against 11.3%), with the largest, partially offsetting, upward effect coming from alcoholic beverages and tobacco (16.7% as against 16.8%).
The largest upward contributions to the annual CPI inflation rate were from housing and utilities (26.7% as against 26.6%), recreation and culture (5% as against 4.9%), health (6.3% as against 5.1%) and alcoholic beverages and tobacco (5.1% as against 3.7%).
Core CPI - which excludes energy, food, alcohol and tobacco - fell to 5.8% in January from December's 6.3%.
Following the data release, the pound lost some ground to the dollar on Wednesday. The pound was trading at around 1.2100 against the dollar, a 0.58% drop as compared to its previous close of 1.2170.