UK inflation eased to 3.0% in January 2026, down from 3.4% in December, marking the lowest annual rate since March 2025. The decline was driven by softer fuel and food prices, raising expectations that the Bank of England may consider interest rate cuts in upcoming policy meetings.
The UK’s Consumer Prices Index (CPI) rose by 3.0% in the 12 months to January 2026, according to the Office for National Statistics. This marks a sharp slowdown from December’s 3.4% and represents the lowest inflation rate in nearly a year.
The easing was largely attributed to falling petrol prices, moderating airfares, and slower increases in food costs. While inflation remains above the Bank of England’s 2% target, analysts suggest the latest figures could strengthen the case for rate cuts in March.
Key Highlights
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Headline CPI: 3.0% in January, down from 3.4% in December
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Drivers of Decline: Lower fuel costs, easing food inflation, moderated transport prices
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Core Inflation: Fell to 3.1%, the lowest since August 2021
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Sector Trends: Housing and utilities inflation slowed; restaurants and hotels saw price growth accelerate
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Policy Outlook: Bank of England may consider rate cuts to support growth
The latest data signals relief for households and businesses, though inflation remains elevated compared to pre-pandemic levels. The moderation reflects improving supply conditions and cautious consumer spending.
Sources: Office for National Statistics, Trading Economics, Investing.com, TheBusinessDesk