• UK CPI rises by 5.5% YoY in January vs. +5.4% expected.
• Monthly UK CPI arrives at -0.1% in January vs. -0.4% expected.
• GBP/USD little changed above 1.3550 on upbeat UK CPIs.

The UK Consumer Prices Index (CPI) 12-month rate came in at 5.5% in January when compared to +5.4% registered in December while beating expectations of a +5.4% print, the UK Office for National Statistics (ONS) reported on Wednesday. 

Meanwhile, the core inflation gauge (excluding volatile food and energy items) rose by 4.4% YoY last month versus +4.2% booked in December, exceeding the consensus forecast of +4.3%.

The monthly figures showed that the UK consumer prices arrived at -0.1% in January vs. -0.4% expectations and +0.5% prior.

Main points (via ONS):

“The largest upward contributions to the January 2022 CPIH 12-month inflation rate came from housing and household services (1.37 percentage points) and transport (1.24 percentage points, principally from motor fuels and second-hand cars).”

“The largest upward contributions to the change in the CPIH 12-month inflation rate between December 2021 and January 2022 came from clothing and footwear, housing and household services, and furniture and household goods.”

“These were partially offset by large downward contributions to change from restaurants and hotels, and transport.”

FX implications:

In an initial reaction to the upbeat UK CPI numbers, the GBP/USD pair hit daily highs of 1.3556 before reversing slightly to 1.3352, where it now wavers. The spot is up 0.14% on the day. All eyes now remain on the Fed minutes and geopolitical updates over Russia and Ukraine.