Retail inflation cools further to 2.05% in January on easing food prices

However, core inflation is expected to still hold steady at +1.9% y/y.

This is down from 2.1% the previous month. However, the move was in line with the BoE forecast for this month.

Alongside the inflation data the ONS is also slated to publish its official house price index.

The main driver for inflation was the new energy price cap on standard variable tariffs recently introduced by energy watchdog Ofgem. Growth in the mining sector declined 1%.

Figures from the Office for National Statistics (ONS) show the Consumer Prices Index (CPI) fell to 1.8% last month, the largest drop since 2016, from 2.1% in December.

Howard Archer, the chief economic adviser to the EY Item Club, said he expects inflation to stay modestly below 2% for much, if not all, of 2019: "We see inflation averaging 1.8% over 2019 and it could very well get as low as 1.6% during the year".

Changes in interest rates are normally only made in response to movements in inflation but are important for financial markets because of the push and pull influence they can exert over worldwide capital flows.

While the current capped rate for energy prices is effective until the end of March, it was announced earlier this month that it would rise by 10%, drawing criticism of the price cap for the government. City economists think so.

The Bank of England said this month that United Kingdom economic growth will likely slow further in 2019 given weakening demand from overseas and a period of increased "Brexit uncertainty" that are expected to reduce activity in the UK.

Core consumer inflation, which strips out food and fuel prices, was estimated at about 5.4 percent in January, slightly softer than a downward revised December figure of 5.6 percent, according to an estimate made by two analysts from inflation figures released on Tuesday.

However, he added: "If there is a no-deal United Kingdom exit from the European Union at the end of March, the inflation outlook will be clouded by a number of factors - most notably what happens to sterling, how well the economy holds up and what tariffs come into effect".

Brexit pandemonium in parliament and uncertainty over the shape of the UK's future relationship with the European Union is the only thing keeping the Bank of England from raising rates again, most economists say, given the United Kingdom is due to depart the EU on March 29.