According to data released by Office for National Statistics (ONS) UK inflation rose by 0.7% last month.
ONS’ Consumer Prices Index (CPI) revealed that the rate increased from 0.6% in December, and that the figure was ahead of analyst forecasts who believed it would be less than 0.5%.
Jonathan Athow, Deputy National Statistician for Economic Statistics at ONS, said: “Inflation rose slightly in January, with food prices increasing. Household goods also pushed up prices with less discounting this year on items such as bedding and settees. However, there were widespread January sales, with particular price cuts for clothing and footwear.”
Food and drink prices rose by 0.6% between December and January, compared with a 0.2% fall over the same period a year earlier; and household goods fell by 1.5% compared with a fall of 3.3% in 2019.
The UK’s inflation rate has been below the Bank of England’s 2% target since mid-2019. The impact of the COVID-19 pandemic and subsequent lockdowns has driven the rate consistently below 1% since March 2020.
Ian Warwick, Managing Partner at Deepbridge Capital, said: “Today’s data confirms the challenging environment for investors as a long period of low interest rates combined with lockdowns has resulted in a scenario where many consumers have accumulated a comparatively high level of savings in a low-return environment.
“Many are therefore sitting on cash piles that are not appreciating in value while agile companies, which continue to survive, and in some cases, thrive, by providing a product or service which has a genuine medium to long term solution to a recognised problem, require capital to continue to develop and grow.
“As a result there is an inherent opportunity for investors and their advisers to address the funding gap and provide long-term support for growth-focused companies via the likes of the Enterprise Investment Scheme.
“The types of companies we support, being innovative technology and life sciences companies, are by their very nature expected to be highly innovative and are therefore are generally focussed on addressing long-term market needs. As we witnessed last year, we believe there should continue to be a genuine need for the research, development and/or products such companies are producing.
“Of course, the life sciences sector has perhaps never seen greater focus and there continues to be great UK innovations in this space. The biggest problem for growing early-stage companies may be access to funding, but we expect UK investors and financial advisers to continue to utilise the Enterprise Investment Scheme (EIS) to support such great companies whilst allowing investors to benefit from the generous potential tax reliefs on offer. EIS has never been a more important Government tool for supporting the UK economy and it has never been more vital for investors to understand the potential benefits.”