VINACHEM

Smaller falls in food and fuel prices helped UK inflation rise to 0.3% in the year to January 2016, according to the latest figures from the Consumer Prices Index (CPI).

The figure is up from a 0.2% rise in the year to December 2015 and is the third consecutive month of small increases.

However financial experts do not believe the latest numbers will add anything to the debate about raising interest rates, which some now believe will remain at 0.5% until 2017.

The main contributors to the latest inflation hike were motor fuels, and to a lesser extent food, alcoholic beverages and clothing.

Motor fuel and lubricants prices decreased overall by 2.6%, compared with a larger fall of 6.8% a year ago. The largest upward contribution to the change in the 12-month rate came from prices for petrol, which dropped by 1.9%, compared with a larger fall of 7.3% in the same relevant period.

A similar, though less pronounced, effect was seen for diesel, with prices falling by 4%, compared with a fall of 6% a year ago.

The only substantial downward contribution to the change in the CPI 12-month rate between December 2015 and January 2016 came from air fares. Prices fell by 35.8% compared with a smaller fall of 17.1% a year ago.

Annual inflation has been below the Bank of England's 2% target for two years. In 2015, the figure was zero.

Martin Lane, a representative at www.money.co.uk, said: "Inflation appears to be slowly creeping upwards but this may be a very misleading economic indicator for consumers.

“We’re just about to see a raft of council tax increases kick in this spring and major communications providers have recently announced price hikes too. It also appears that key items like food, alcohol and clothing are all contributing to this rise which is a greater worry to those on low incomes.

“Consumers shouldn’t sit on their hands in the belief that inflation will stay low and life will not cost them more each year. Saving money where you can is a great habit to get into, but paying down debts while interest rates are low could be a bigger money saver in the long run.​”

The British Chambers of Commerce chief economist, David Kern, said: “While UK inflation continues to edge up slowly, inflationary pressures are likely to remain muted for the foreseeable future. Labour costs remain subdued, and any upturn in oil prices will take considerable time to be felt, given recent sharp declines.

“Our forecast remains that inflation will edge up to around 1% in the second half of this year, and is likely to stay below the 2% target until well into 2017. Risks remain associated with the weakening global economic outlook. The MPC is likely to avoid any thought of raising interest rates for a considerable time yet. In the face of global headwinds, the policy priority remains to support our exporters.”