Inflation falls to 3%, raising prospect of spring rate cut - London Business News | Londonlovesbusiness.com

"UK inflation has fallen to 3%, its lowest level since March last year, increasing expectations that the Bank of England could begin cutting interest rates as soon as next month. Figures released by the Office for National Statistics (ONS) show the Consumer Prices Index (CPI) dropped from 3.4% in December to 3% in January. The decline was driven by lower petrol prices, easing food costs and a reduction in airfares."

"The reading was in line with analysts' forecasts and marks a return to a downward trend after inflation ticked higher at the end of last year. Economists now believe price growth is on course to fall back to the Bank of England's 2% target by April if current trends continue. The latest figures will provide some relief for Chancellor Rachel Reeves as the government seeks to steady the economy and ease pressure on household finances."

"Attention now turns to the Bank of England, which has held interest rates at 3.75% in an effort to tame inflation. Financial markets are increasingly pricing in the possibility of a rate cut at the Bank's next meeting, with some economists predicting further reductions later in the year if inflation continues to moderate. A cut in interest rates would reduce borrowing costs for households and businesses, potentially offering support to mortgage holders and firms facing higher financing expenses."

UK consumer inflation declined to 3% in January from 3.4% in December, marking the lowest rate since March last year. The fall was driven by lower petrol prices, easing food costs and reduced airfares. Analysts' forecasts matched the reading and economists expect price growth to return to the Bank of England's 2% target by April if current trends continue. The figures relieve pressure on household finances and offer some fiscal breathing room. Markets increasingly price in a near-term rate cut from the Bank, though policymakers are likely to act cautiously to avoid reigniting inflation.

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