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UK inflation was 4% in January, the same rate as in December, latest figures show

The biggest upward factor was rising gas and electricity costs - the biggest downward factor was furniture and food. On a monthly basis, food prices fell in January for the first time since September 2021. Chancellor Jeremy Hunt says: "The plan is working, we have made huge progress in bringing inflation down". But Labour's Rachel Reeves says prices are still rising, and that "it's time for a change". Inflation peaked at 11.1% in October 2022 - the government pledged to halve the rate in 2023. The new data shows core inflation - which excludes energy and food - was also unchanged, at 5.1%.Meanwhile, rents were up 6.2% compared to last year - while house prices across the UK were down 1.4%

To slow the rate at which prices in supermarkets are rising, the Bank of England tends to increase interest rates - which are currently set at 5.25%, the highest level in 16 years.

The theory behind this is that by making borrowing more expensive, people will have less money to spend. They are also encouraged to save more as saving rates increase.In turn, this is meant to reduce demand for goods and slow the pace of price rises - but it's a balancing act. By increasing borrowing costs, there is a risk of harming the economy as businesses could stop investing and jobs could be cut.There have been concerns about the UK's weak economic growth for some time, but that doesn't mean interest rates will be cut anytime soon - even with today's unchanged rate of inflation. The Bank has previously said it needs "firm evidence" that inflation is under control before doing so.The BoE has started discussing rate cuts now, though, and economists are predicting the first cut could come around June of this year.As we said a little earlier, attention will remain on the economy tomorrow when the latest GDP figures are released. We'll be covering those live too, so join us again tomorrow morning.

How UK inflation compares to other economies

Many other countries have also been experiencing a cost-of-living squeeze and higher interest rates.But UK inflation remains higher than in the EU and US.The annual inflation rate for countries using the euro was estimated to be 2.9% in the year to December.In the US, inflation fell from 3.4% to 3.1% last month - many analysts had expected it to drop further to 2.9%.The European Central Bank raised its key interest rate to 4%, a record high, in September and has left it unchanged since.At its December meeting, the US central bank kept its key interest rate unchanged between 5.25% and 5.5% for the third time.

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