CPI edged slightly higher in January, rising to 2.2% year-on-year. The largest upward pressure came from a rise in transport costs, as average petrol prices rose by 1.3 pence per litre in January, compared with a fall of 0.8 pence per litre a year ago. RPI rose to 4.1%, as household goods were discounted by less than last year.
Overall, we expect inflation to increase significantly in the coming months and, after peaking in July, fall back to below 2% by the end of the year.
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