UK inflation was unchanged in January 2024 remaining at 4.0%, according to figures released today by the Office for National Statistics (ONS).
Despite forecasters predicting a rise, the Consumer Prices Index (CPI) remained 4.0% in the 12 months to January 2024, the same rate as in December 2023, and down from a peak of 11.1% in October 2022, the highest rate in over 40 years.
A rise in the energy price cap in January resulting in higher gas and electricity charges contributed to the inflationary pressure. But the falling annual rate of food and non-alcoholic beverages from 8.0% in December 2023 to 7.0% in January 2024, the lowest annual rate since April 2022, helped CPI remain static.
Following the latest inflation announcement, Mike Randall, CEO of Simply Asset Finance said, "As inflation holds there will be a moment for respite for businesses, but we also need to consider the broader picture. To bolster growth a substantial drop in interest rates is still needed, meaning inflation must start coming down at a faster pace.
"Elsewhere, we've seen business insolvencies reaching a 30-year high, as rising debts and increased costs have weighed down on firms. And while data shows these insolvencies aren't happening at the same rate as the 2008 financial crisis, there is a clear need for support from both the government and lenders.
"The introduction of the renewed Help to Grow scheme is a positive step, but as the Recovery Loan Scheme comes to an end in June, it's important we act now as an industry to provide businesses with stability and certainty. We urge the government to consider the continuity of support schemes like this to avoid the removal of another line of support, at a time it is needed most. For lenders, extra support means working closely with businesses and offering an alternative to insolvency - through refinancing, loan restructuring, or consultancy - and giving them a better chance for a future.”
Neil Rudge, Head of Enterprise at Shawbrook, said: Inflation remaining stable will likely come as welcome news for the business community, and raise optimism for potential early rate cuts by the central bank. This hold, coupled with the shared outlook of economists and the Bank of England forecasting a return to the 2% target in Spring holds promising implications for SMEs.
“The anticipated decline in inflation not only enhances affordability but also provides a more predictable landscape for costs, offering a positive outlook for business leaders navigating the challenges of supply chain complexities and a tight labour market. A decreased inflationary pressure will allow SMEs to strategise and operate with greater confidence in the coming months and we’re already seeing an appetite among business leaders for growth and a generally optimistic outlook.”
