UK inflation Jan 2026

Inflation rate in the UK decreased to 3 percent in January latest figures From the Office for National Statistics (ONS).

Economists polled by Reuters had expected the consumer price index to fall from 3.4% to 3% in the twelve months to December.

Core inflation, excluding energy, food, alcohol and tobacco, decreased from 3.2% in December to 3.1% in January.

ONS Chief Economist Grant Fitzner, commenting on

“With the decline in prices following the increase in December, flight tickets also decreased this month. Low food prices also helped reduce the prices of bread, grains and meat. These were partially offset by hotel accommodation and takeaway service costs,” he said.

Sterling As expected, it remained stable at $1.3562 against the dollar following the data.

The data will be analyzed closely by the Bank of England, which is looking for further signs to confirm its view that inflation will fall close to the central bank’s 2% target by April.

UK jobs and pay data Statements made on Tuesday signaled to the BOE that the weakness in the labor market and inflationary pressures were easing; The unemployment rate rose to 5.2% in December, the highest level in the last five years. Annual wage growth, an important measure of inflation followed closely by the central bank, weakened in the last three months of 2025.

Growth data released last week showed a broader slowdown continuing, with the economy growing at a weak 0.1% in the fourth quarter. We will get a new view of the economic activity in the country when the purchasing managers index (PMI) data is announced next Friday.

Economists expect the latest data could lead the BOE to cut its benchmark interest rate, currently at 3.75%, at its next meeting in March.

“Sticky inflation has been the UK’s Achilles heel for several years, requiring the Bank of England to keep interest rates restrictive. But it looks like we’ve finally turned a corner,” JP Morgan Asset Management global market analyst Zara Nokes said in emailed comments Wednesday. he said.

“Today’s data showed a meaningful decline in headline inflation, with broad-based inflation declining across sectors. More importantly, this progress needs to continue, with headline inflation likely to fall within touching distance of the 2% target by April,” he added.

Nokes said the BOE probably has room to cut interest rates by another 25 basis points before reaching the neutral rate, adding: “The recent moderation in wage increases should also help keep the very significant services inflation that has plagued the Bank of England at bay.”

“Based on the latest set of employment data, I expect these cuts to be front-loaded,” he said.

Danni Hewson, head of financial analysis at AJ Bell, said in an emailed comment on Tuesday that the bleak picture painted by the latest UK growth figures and Tuesday’s evidence of a lackluster job market raise the possibility of the BOE cutting rates at its next meeting in March.

“He also raised the expectation that interest rates could fall to 3% by the end of the year,” Hewson added.