IoD press release January’s inflation data does little to alleviate stagflationary fears
Commenting on today’s data from the Office for National Statistics, which showed that the annual rate of CPI inflation increased to 3.0% in January 2025 from 2.5% in December 2024, Dr. Roger Barker, Director of Policy at the Institute of Directors, said:
“This is a higher inflation rate for January than most economists were expecting. Most anticipated an uptick from last month’s figures due to changes in the way transport costs were being incorporated into the index. However, unanticipated inflationary pressures also appeared in food and non-alcoholic beverage costs and in the education sector. Worryingly, services inflation showed remarkable resilience, rising to an annualised rate of 5% (from 4.4% in the previous month).
“This month’s figures add to the uncertainty around the UK inflationary outlook. In April, the private sector must determine its response to significantly higher employment costs, and this may well push up consumer prices. The latest figures also cast doubt on the pace of future interest rate cuts, which the Bank of England may choose to delay due to the persistence of inflationary pressures. The worst-case scenario for UK business is stagflation, combining high inflation and low growth. January’s inflation figures have done little to mitigate the risk of this outcome.”
