UK inflation dropped to a nearly one-year low of 3% in January as the pace of price increases continued to slow. This marks the lowest level of inflation since March 2025, down from 3.4% in December, in line with economists’ expectations.
The Office for National Statistics (ONS) reported that the decline was primarily driven by lower petrol and food prices, as well as reduced airfares. Inflation had reached 3.8% the previous year, with a peak of 11.1% in October 2022.
The Bank of England anticipates that inflation will approach its 2% target by mid-2026. The latest figures have sparked speculation of a potential interest rate cut in March, with the current base rate at 3.75%.
Experts such as Jonathan Moyes from Wealth Club and David Hollingworth from L&C Mortgages suggest that a rate cut is likely given the prevailing economic conditions. Lower petrol and food prices were highlighted as significant factors contributing to the decrease in inflation.
Core inflation, excluding volatile elements like energy and food, stood at 3.1% in January. Chancellor’s response to the inflation news emphasizes efforts to reduce the cost of living through various measures, including energy bill reductions and freeze on certain fees.
In January, inflation fell to 3%, with notable decreases in petrol and food prices. While inflation indicates how prices change over time, a decline does not imply a halt in price increases, just a slower rate. The ONS monitors inflation based on a range of goods and services reflecting consumer spending patterns.
