The annual inflation rate in the United Kingdom fell to 3.0% in January, marking the lowest reading in nearly a year. The decline from December's 3.4% is in line with market expectations and economists' forecasts from London's financial district. While these figures bolster hopes for an interest rate cut in March, persistent high pressure in the services sector raises some concerns among British central bankers.

Drop to Lowest Level

Inflation in the United Kingdom fell to 3.0% in January, marking the lowest reading in ten months, in line with market forecasts.

Pressure in Services Sector

Despite the decline in the overall index, services inflation stood at 4.4%, which turned out to be higher than the Bank of England's assumptions.

Hopes for Rate Cut

Financial markets see these data as an argument for an interest rate cut as early as the March meeting of the central bank's steering committee.

The UK economy has entered a phase of significant slowdown in consumer price growth. According to the latest data published by the Office for National Statistics, the CPI index fell to 3.0% in January from 3.4% in December. The main factors driving this process were declines in fuel prices, airfare costs, and basic food items such as bread, cereals, and meat. This is the lowest inflation level since March 2025, representing a positive signal for the Labour government and consumers feeling the effects of previous cost-of-living increases. The UK banking system is based on the tradition of the Bank of England's independence, which was formally established in 1997. Since then, the institution has independently set the path for interest rates, aiming to maintain inflation at a two percent target. Despite the overall downward trend, detailed data indicates persistent inflationary pressure within the economy. Services inflation stood at 4.4%, slightly exceeding the Bank of England's forecast of 4.1%. Experts note that this parameter is closely monitored by policymakers when determining monetary policy. Investors are looking hopefully towards the upcoming March meeting of the Bank of England, expecting the drop in the main inflation indicator to become a catalyst for an interest rate cut. 3.0% — was the annual inflation rate in JanuaryThese data serve as a crucial reference point for the debate on the state of UK public finances. Although the pace of price growth has slowed, representatives of consumer organizations emphasize that this does not mean a decrease in prices themselves, but only a slower increase compared to the previous year. This situation places the Bank of England in a difficult position – it must balance optimism stemming from declining overall inflation with caution forced by still-high core inflation. 2025-12: 3.4, 2026-01: 3.0 Changes in Inflation Indicators: : → ; : →