Will new ONS inflation data herald hope?

BRITAIN’S cost-of-living crisis is easing slightly, data from the Office for National Statistics is expected to show this week, with inflation falling and wages modestly increasing.

On Tuesday the official statistics group is tipped to say that average earnings growth excluding bonuses rose modestly, up 0.1 points to 6.5 per cent in December. The following day, the ONS is likely to say that consumer price index (CPI) inflation fell from 10.5 per cent in December to 10.2 per cent in January.

However, economists say that as the ONS is changing how it calculates inflation, January’s figure could be even better than expected.

Capital Economics chief UK economist Paul Dales said if food and energy are given greater prominence in how CPI inflation is calculated, then their recent falls could drive the overall rate lower. “We think CPI inflation took a step down from 10.5 per cent in December to 10.2 per cent. But January’s data will be calculated from new weights, increasing the chances of a big surprise,” he said.

Elsewhere, start-ups are the most confident of growth among small businesses, according to Novuna Business Finance. It said 63 per cent of start-ups predict growth for the first quarter, compared to 49 per cent in the fourth quarter of 2022 and 44 per cent this time last year.

In contrast, established small businesses predicting growth have remained at 27 per cent over the past four quarters. Larger enterprises have dropped to 33 per cent from 43 per cent at the end of 2022 and 52 per cent for this time last year.