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UK inflation slowed by more than expected to a six-month low in January, adding to growing evidence that price pressures have peaked.

The annual rate of consumer price inflation declined to 10.1 per cent in January, the Office for National Statistics said on Wednesday, down from 10.5 per cent in December. Inflation hit a high of 11.1 per cent in October.

The January reading was lower than the 10.3 per cent forecast by economists polled by Reuters.

Core inflation, which strips out volatile food, energy, alcohol and tobacco prices, declined to 5.8 per cent in January from 6.3 per cent the previous month. The figure, a closely watched measure of underlying price pressure, was much lower than the 6.2 per cent forecast by economists.

Chancellor Jeremy Hunt said: “While any fall in inflation is welcome, the fight is far from over.

“High inflation strangles growth and causes pain for families and businesses — that’s why we must stick to the plan to halve inflation this year, reduce debt and grow the economy.”

UK price pressures remain higher than in some other countries, in part because of energy costs.

US inflation slowed to a 15-month low of 6.4 per cent in January. In the eurozone, preliminary figures showed price growth slowing to an eight-month low of 8.5 per cent in January, following a large reduction in energy inflation.

The Bank of England recently forecast that headline inflation would fall “sharply” for the rest of the year on the back of lower energy price growth. However, it warned about the risks of “greater persistence” in underlying inflation.

Markets are pricing in a 0.25 percentage point rate rise in interest rates next month, a slowdown from the half percentage point increase in February.

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