Rate cut likely after inflation stays put, say commentators

The consumer prices index (CPI) inflation figures for December will not put off decision makers at the Bank of England planning a February rate cut, commentators have said.

Last month's CPI was unchanged from November at 2.1 per cent, the Office for National Statistics (ONS) revealed today.

Experts responding to the news argued this would not be enough to prevent a rate cut in February.

Global Insight economist Howard Archer took this view, although he believed the news was enough to prevent a rate trimming this month.

He said: "The December producer price inflation data were pretty nasty and probably contributed to the Bank of England's reluctance to cut interest rates for a second month running at its January MPC meeting."

The main area of inflationary concern may be utility bills, which the ONS said were a downward influence in December, but are now rising.

Energy firm nPower recently put up its prices and the other power companies are expected to follow suit.


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