While the sharpness of the rise in inflation came as a surprise – economists had expected a reading of 2.8% – it is much lower than its peak of 11.1% in October 2022.
That led to higher interest rates, which has made the cost of loans, credit cards and mortgages, more expensive.
As inflation has eased, the Bank of England has cut interest rates, including a quarter point reduction to 4.5% this month.
Data on Tuesday estimated average wages in the UK also continue to outpace inflation, with pay packets, after taking into account the pace of price rises, rising by 3.4% between October and December.
But with inflation remaining above the Bank’s 2% target, January’s figure will be “uncomfortable” for policymakers, according to Ruth Gregory, deputy chief UK economist at Capital Economics.
She said the leap was “no surprise, but it was larger than everyone expected”, adding that she doubted it would prevent further interest cuts this year.
“The risk is that the rise in inflation proves more persistent and rates are cut more slowly than we expect, or not as far,” Ms Gregory added.
In response to the latest figures, Chancellor Rachel Reeves reiterated that her “number one mission” was to get “more pounds in pockets”.
But James Murray, exchequer secretary to the Treasury warned getting inflation back down to the 2% target would be “bumpy”.
“The Bank of England has been clear that they expected inflation to be slightly higher in the first half of this year….but we’re confident in our plan for change to make sure that we’re kick-starting economic growth by making the reforms that are necessary to boost economic growth right across the country,” he added.
Both the Conservatives and Liberal Democrats blamed Reeves’s Budget decisions for the rise in inflation.
Apple has taken the unprecedented step of removing its strongest data security tool from customers in the UK, after the government demanded “backdoor” acces
Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Apple is withdrawing its most secur
Reynolds: Shadow justice secretary calls for him to be sackedThe Solicitors Regulation Authority (SRA) has reopened its investigation into business secretary Jo
The UK competition regulator has fined four major banks, including HSBC and Citi, more than £100m after it found traders had been using Bloomberg chatrooms to