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UK inflation slowed for the second month in a row, dropping from 10.7% to 10.5%, with petrol and diesel prices easing last month. However, the cost of food, notably milk, cheese and eggs, continues to keep inflation high, rising 16.8% to the end of December as families spend for Christmas. BoE’s Bailey spoke positively on the subject, stating that a ‘corner has been turned’, and that inflation may be on an ‘easier path’. The Bank was not however trying to change the market’s expectations on the terminal rate.

While many have been eagerly awaiting China’s reopening, the ECB’s President Lagarde worries that it may actually increase rather than decrease inflation. Following extensive debate this week at the World Economic Forum in Davos, economists have been divided on the impact of China’s reopening on the European economy. On one hand, the restoration of supply chains may ease some of the inflationary pressures seen recently. However, China’s increased consumption of energy may push the already tight energy crisis even further.

Rail workers have been given a new pay offer by train operators in an attempt to end long-running strike action. The RDG (Rail Delivery Group) has made the new offer to the RMT union following talks over the past week. Aside from the new pay figures, which combine a backdated 5% rise for 2022 and a 4% rise this year, the offer also addresses some of the issues presented regarding working conditions.