Unchanged inflation, interest rates and more data tomorrowpublished at 12:35 Greenwich Mean Time 14 February 2024

12:35 GMT 14 February 2024

Michael Race
Business reporter

Image source, Getty Images

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 on Thursday morning.

Sam Hancock
Live reporter

We're going to close this page soon - but before we head off for lunch, here's a recap of what's happened today:

• UK inflation held at 4% in January, the same as it was last month, defying expectations of a slight jump after the rate rose marginally in December
• The largest upward contribution was housing and higher energy charges - while the biggest downward factor came from food, non-alcoholic drink, furniture and household goods
• Food prices also saw their first monthly drop for more than two years (with special thanks to the humble chocolate biscuit)
• Chancellor Jeremy Hunt said the government's plan to tackle inflation "is working", while shadow chancellor Rachel Reeves pointed to inflation remaining at double the Bank of England's 2% target
• What the Bank makes of today's figures remains to be seen - but analysts predict the first interest rate cut is still "several months off"

Image source, .

Today's coverage was brought to you by our BBC Business colleagues Jennifer Meierhans and Michael Race, as well as Gem O'Reilly, Emily Atkinson, Ruth Comerford and Thomas Mackintosh. It was edited by me.

We've had a busy week of economic news - and it's not over yet.

Tomorrow, the Office for National Statistics (ONS) will release its latest figures on gross domestic product (GDP), which measures the health of the economy.

This will show whether or not the UK’s economy grew or shrunk between October and December - and, crucially, by how much.

A recession is typically defined as when the economy shrinks for two three-month periods (or quarters) in a row. Read more on that here.

GDP contracted by 0.1% between July and September 2023 - and there was zero growth between April and June.

So, if the fourth quarter follows suit it means the UK is technically in recession - and if it grew then the UK has avoided recession.

Raphael Sheridan
Cost of living producer

The final business owner I've been speaking to is Gareth Jones, who fronts the family-run Singleton Jones delicatessen in Warrington Market.

He says price rises have been "tough for everybody" - and that increases from his suppliers have put him between "a rock and a hard place".

“If I move my prices up, I’ve gotta sell it to someone," he explains, "and if you make it too dear, they don't come in."

Jones adds that he's noticed his customers’ shopping habits have changed as a result of the cost of living crisis:

Energy driving cost of living higherpublished at 11:59 Greenwich Mean Time 14 February 2024

11:59 GMT 14 February 2024

Michael Race
Business reporter

Image source, Getty

Energy prices have been one of the biggest drivers behind the UK's high inflation in recent years - and it's no surprise really.

The world is still largely dependent on oil and gas, so when the price of the raw materials go up - as they did in the aftermath of Russia's invasion of Ukraine - the knock-on effects are felt far and wide.

Here's one example - a small business owner in the UK imports products to sell on to customers, but as a result of higher oil prices, has to pay higher shipping costs because the shipping company has to pay more for the fuel it uses to transport goods.

The small business owner, who might also be paying higher gas and electricity bills for their store, might decide they need to increase the prices of the goods they sell.

That leads to customers paying more for the same products, but having less money in their pocket.

Adding to that, as people feel the pinch of the cost of living, they may ask for a pay rise - which increases costs for their employers, who might decide to up their prices again.

That is why the energy crisis is a big factor in why the cost of living has jumped at home.

• You can read more in-depth coverage on the cost of living here

It can never hurt to have a reminder of the key terms.

Inflation measures how quickly the prices of goods and services are rising (or, very occasionally, falling).

A series of recent shocks to the economy - the Covid pandemic, the war in Ukraine and domestic worker shortages - has caused high inflation here in the UK.

The soaring cost of energy, in particular - caused predominantly by Russia's invasion of Ukraine - has been a key factor driving the inflation rate in recent months.

So, as we said earlier, while there was no rise in today's inflation rate from last month, things will continue to cost more than they did before.

Image source, Getty Images

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.

• You can read more about this here

Image source, PA Media

Earlier this morning, Prime Minister Rishi Sunak hosted a meeting of the Business Council at 10 Downing Street.

He touched briefly on the news that inflation held at 4%, saying: "Of course we're still battling with lots of global headwinds, not least the Red Sea at the moment, but at the start of this year I absolutely believe that the economy has turned the corner and we're now pointing in the right direction."

Sunak's Red Sea reference concerns global supply chains being disrupted as the world's biggest shipping companies continue to divert journeys away from the inlet due to attacks by Houthi rebels in Yemen.

An economist told the BBC last month that this could have a knock-on effect for inflation.

Image source, .

We're continuing to look at the day-to-day food products that have experienced a slow in inflation this month, compared to those that have had a rise.

As well as the products we've already mentioned - chocolate biscuits and sponge cake inclusive - here's a look at some others.

Examples of where the rate of inflation has slowed:

• Potatoes: December up 9.6%, January up 7.1%
• Sugar: December 21.3%, January 18.0%
• Fresh or chilled fish: December 7.2%, January 5.2%
• Bread: December 2.2%, January 2.1%
• Fresh or chilled fruit: December 6.7%, January 6.6%
• Tea: December 11.3%, January 10.6%
• Meat: December 7.2%, January 6.6%

And those where it's increased:

• Pasta and couscous: December up 6.6%, January up 10.8%
• Fruit and vegetable juices: December 10.4%, January 12.2%
• Yoghurt: December 8.6%, January 9.9%
• Eggs: December 6.8%, January 7.2%
• Dried vegetables: December 5.1%, January 5.4%

Remember: The fact there was no increase in inflation today doesn't mean prices are falling - they're just rising less quickly.

Raphael Sheridan
Cost of living producer

Steven White owns Moran's of Warrington, a family shoe repair business that's been running for 80 years.

He says his business still hasn’t recovered from the pandemic when it was forced to shut during lockdowns. White says that by the time they reopened, shopping habits had shifted to online and the cost of living crisis had hit.

"Historically, shoe repair should increase in times like this really, but we're just not seeing it, I think, largely down to lack of footfall, really. People just don't have the money to go into town," he tells me.

At the same time, White says he's grappling with soaring prices:

There's some more political reaction to today's figures, with the Scottish National Party (SNP) warning that many people will still "face the difficult choice between heating their homes or spending money on other basics like food".

Drew Hendry, the SNP's economy spokesperson, says mortgages, rent, food and energy bills will all remain "stubbornly high for some time". He goes on:

Michael Race
Business reporter

A bit more now on housing after the latest mortgage rates were also published today - they're up marginally on yesterday:

• The average two-year fixed mortgage today is 5.63%, up from 5.61%
• The average five-year fixed deal is 5.26%, up from 5.24%

Mortgage rates began falling earlier this year as competition intensified among lenders for people on the hunt for a new deal.

But it's worth noting that while mortgage rates might be lower than last year, which saw a typical two-year deal hit 6.7%, many homeowners will still face much higher repayments.

About 1.6 million existing borrowers have relatively cheap fixed-rate deals expiring this year.

Kevin Peachey
Cost of living correspondent

Image source, PA Media

I'm continuing to look at today's figures in relation to housing - one of the largest upward contributors to the monthly change in annual rates.

On average, UK house prices fell in the year to December, with the Office for National Statistics (ONS) recording a drop of 1.4%.

But the picture varies quite noticeably in different parts of the country.

In England, prices were down 2.1% - and they were 2.5% lower over the year in Wales. However, they were up 3.3% in Scotland over the same period.

Figures are collected slightly differently in Northern Ireland, but rose by 1.4% in the final quarter of the year.

Regionally, there were house price increases over the year in north-west England and the West Midlands, but falls elsewhere. London's average house prices remain the most expensive of any region in the UK.

Kevin Peachey
Cost of living correspondent

A busy day of publications by the Office for National Statistics (ONS) includes some frustrating news for renters.

In January, tenants paid 6.2% more in rent than they did a year earlier. This figure is unchanged for the second consecutive month.

This is high, and is even higher in London, where the annual increase is 6.9% - and in Scotland, where it is 6.8%.

Renters have faced stiff competition for properties, just at a time when supply from landlords has been shrinking.

Many analysts suggest that the pace of increases will slow in the coming months though.

For purely professional reasons, we've been looking at some of the products which have led to the first monthly fall in food prices for well over two years.

Cream crackers, sponge cake and chocolate biscuits are some of the household items which influenced the decrease, the Office for National Statistics (ONS) says in its latest figures.

Items which provided even more of a decrease in January's figures included the likes of potato crisps, cooking sauces and instant coffee.

And with that, it's time to put the kettle on...

Image source, Getty Images

A bump in the road avoided, for nowpublished at 09:54 Greenwich Mean Time 14 February 2024

09:54 GMT 14 February 2024

Peter Ruddick
Business reporter

The government, the Bank of England and economic forecasters all warned there could be bumps in the road towards lower inflation.

There had been fears today would deliver a second of those bumps in a row. Instead, the headline rate remained static.

If it hadn't been for an increase to energy bills, there might even have been a fall in the way we measure the rising cost of living.

Those gas and electric bills are currently forecast to fall in April, which is why Chancellor Jeremy Hunt is confident in his prediction that inflation will reach the Bank of England's 2% target soon.

There will certainly be sighs of relief in Downing Street that the negative headlines that come with a bump in the road have been swerved.

But, away from the numbers, households and businesses continue to struggle. And the bad news for the government is we could get a very real reminder of that when we get the economic growth figures tomorrow.

Michael Race
Business reporter

We in the newsroom are still looking through today's inflation figures - and another thing they show is that petrol and diesel prices are down by almost 10p a litre compared to 12 months ago.

You may remember that pump prices spiked in the aftermath of Russia's invasion of Ukraine almost two years ago now, when global oil prices surged.

The Office for National Statistics (ONS) says in January, the average price of petrol was £1.40 per litre - down from £1.49 last year. The drop in diesel costs is much bigger. Prices stand at £1.48, whereas they were £1.72 this time last year.

As we reported earlier, food prices dropped monthly for the first time since September 2021.

Image source, Getty Images

There's more political reaction coming to us, this time from the Liberal Democrats who say the latest inflation figures will "come as cold comfort for millions" of families.

Sarah Olney, the party's Treasury and business spokesperson, says:

Raphael Sheridan
Cost of living producer

Let's hear now from another business owner. Robert Leicester, owner of Warrington Fruit & Veg, says business are "surviving instead of striving" in the current economic climate - but he insists he's "still smiling".

"Since the cost of living [crisis started], I can gladly say my customer count has not really fallen," he tells me, adding the average spend is slightly up - but "that's because prices have gone up".

"People are watching what they spend, though," he says, explaining how people are buying "the basics" and not treating themselves to "Dragon Fruit or something a bit more exotic".

He also says Warrington Fruit & Veg - like other businesses - are having to "cope on what we've already got". Here's a bit more from Robert:

We brought you Chancellor Jeremy Hunt's reaction to today's figures a little earlier - but here's a snippet of the statement he went on to give to reporters.

The government "won't be able to relieve pressure on families" until the target inflation rate of 2% is met, he said.

Watch the clip in full below: