Inflation edges up to 1.9% on higher food prices

Consensus expectations were for inflation to remain at its January two-year low of 1.8%, but higher food, alcohol and video game prices caused a slight increase of 0.1 percentage points.

However, core inflation, which excludes the most volatile components like food and energy prices, declined slightly from 1.9% to 1.8%, meaning there is a lack of domestic inflationary pressure.

Markets have had little reaction to the news, which is also not expected to affect the path of interest rates.

Hargreaves Lansdown senior economist Ben Brettell said: "The Bank of England has been setting a neutral tone as Brexit approaches, with policymakers hamstrung by political uncertainty and a deteriorating global growth outlook.

"The bank has said it thinks higher interest rates will be appropriate in the coming months, as it aims to keep inflation close to its long-term 2% target."

Commenting on the impact of Brexit, he said he expected the Bank of England to keep interest rates low if the eventual result is a no-deal departure.upport the economy. I'd expect them to do the same here."

Aegon head of pensions Kate Smith added the below-target inflation provided impetus for increased savings into pensions, particular as minimum total contributions are set to rise from 5% to 8% in just over two weaks.

She said: "While inflation remains low, individuals should look to save any additional income where they can, particularly given that auto-enrolment pension contributions are about to increase and there is continued uncertainty around what impact Brexit may have on people's spending power.

"Individuals need to think carefully about how to protect the spending power of their retirement savings, particularly if we see a continuation of the rise in inflation.

"The erosive effects of inflation can be very damaging and even in a period of low inflation, today's money can dramatically reduce in spending power over the long-term."

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• Topics
• Investment
• Inflation
• Hargreaves Lansdown
• Office for National Statistics
• CPI
• interest rates
• Brexit
• sterling
• Consumer Prices Index
• Aegon
• Kate Smith
• Auto-enrolment
• AE