UK inflation latest updates: Inflation falls steeply to 3 per cent prompting hopes of interest rate cut: Live
The drop in inflation to 3 percent in the UK increased hopes for an interest rate cut.
The decline in Consumer Price Index (CPI) data published by the Office for National Statistics came after the surprise increase to 3.4 percent in December.
This marks a return to the gradual downward trend seen at the end of last year, with analysts predicting it would put it on track to meet the government’s 2 per cent target by April.
Following rising unemployment this week, slowing wage growth data and a persistently weakening economy, the hope is that the decline will encourage the Bank of England (BoE) to cut interest rates next month when the Monetary Policy Committee meets to vote on March 19.
Inflation rose above 11 percent in October 2022 and, although it returned to more manageable levels last year, the pace has been slower than businesses and households would like, causing interest rates to remain high for longer.
Falling household bills and the lowering of the energy price cap in April are expected to contribute to bringing CPI inflation back to 2 percent by spring. Food inflation, which contributed greatly to high inflation last year, is also expected to slow down.
Minister hails inflation figures as ‘good news’
Political correspondent Athena Stavrou reports:
A government minister hailed today’s UK inflation figures as “good news”.
According to the latest figures published by the Office for National Statistics, the Consumer Price Index (CPI) decreased to 3 percent.
It rose to 3.4 percent with a surprise increase in December.
Wales secretary Jo Stevens told Sky News: “It’s good news today because we’re completely focused on reducing people’s living costs.”
“Given what we have done to freeze rail fares for the first time in 30 years, cut £150 off energy bills, freeze fuel duty and freeze prescription charges in England, these all contribute to tackling people’s biggest concern right now, the cost of living.”
Dan Haygarth18 February 2026 07:48
Why did inflation drop to 3 percent?
Transportation, food, non-alcoholic beverages and education were the sectors that contributed to the decline.
Dan Haygarth18 February 2026 07:42
Stride: ‘Families still suffering from Labour’s economic mismanagement’
Sir Mel Stride, shadow chancellor of the Exchequer, said: “Inflation remains above target thanks to Labour’s choices. Families are still feeling the pinch due to Labour’s economic mismanagement.”
“This comes after the Office for National Statistics confirmed that unemployment has risen to a five-year high, youth unemployment is now above the European average and GDP per head has fallen. Wes Streeting was right that Labor had no growth strategy.
“Britain is out of control; the economy is weaker and workers are paying the price. Only the Conservatives have a plan for a stronger economy and a leader with the backbone to implement that plan and get Britain working again.”
Dan Haygarth18 February 2026 07:27
Cutting living costs is my number one priority, says Chancellor
Chancellor Rachel Reeves said: “Reducing the cost of living is my number one priority.
“Thanks to the choices we have made in the budget, we are reducing inflation with a £150 cut on energy bills, a freeze on rail fares for the first time in 30 years and a refreezing of prescription charges.
“Our economic plan is the right plan: to reduce the cost of living, reduce the national debt and create the conditions for growth and investment in every part of the country.”
Tom Barnes18 February 2026 07:15
UK inflation falls sharply to 3%
The drop in inflation to 3 percent in the UK increased hopes for an interest rate cut.
The decline in Consumer Price Index (CPI) data published by the Office for National Statistics came after the surprise increase to 3.4 percent in December.
This marks a return to the gradual downward trend seen at the end of last year, with analysts predicting it would put it on track to meet the government’s 2 per cent target by April.
Tom Barnes18 February 2026 07:12
