"The UK's inflation rate fell to 3% in January, down from 3.4% in December, driven by a decrease in food, fuel and airfare prices. Economists said the decrease raised the likelihood the Bank of England will cut interest rates at its March monetary policy meeting. The Office for National Statistics (ONS) said the "marked" fall in January took inflation to its lowest rate since March 2025."
"Although the rate of inflation has fallen, prices themselves are not coming down, but simply rising at a slower pace. ONS chief economist Grant Fitzner said: "Inflation fell markedly in January to its lowest annual rate since March last year, driven partly by a decrease in petrol prices. "Airfares were another downward driver this month with prices dropping back following the increase in December.""
"Wednesday's fall in inflation, coming after figures showed a slowdown in wage growth, makes it more likely the Bank of England will cut its key interest rate - currently set at 3.75%. Economists are expecting inflation to fall further in the coming months, with the government cutting household energy bills from April. Forecasters Cornwall Insight predicted the measure would help lower the energy price cap for a typical household by 117 to 1,641 from April."
Annual UK inflation declined to 3% in January from 3.4% in December, led by falls in petrol, airfares, food and fuel costs. The Office for National Statistics reported the lowest annual rate since March 2025, noting prices continue to rise but at a slower pace. The drop, coupled with slower wage growth, raises the probability of Bank of England interest-rate cuts from the current 3.75%. Expected government reductions in household energy bills from April and forecaster projections for a lower energy price cap support forecasts of further inflation easing and potential multiple rate cuts.
Read at www.bbc.com
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