UK Inflation Rate Falls to 3% in Year to January 2026

Published: 18 February 2026. The English Chronicle Desk. The English Chronicle Online

The United Kingdom’s consumer price inflation rate slowed sharply in the year to January 2026, dropping to 3.0%, the lowest rate in nearly a year, the latest official figures show. The decline from 3.4% in December 2025 marks a continued easing in price pressures on households and is widely expected to influence the Bank of England’s interest rate decisions later this year.

Official data from the Office for National Statistics (ONS) indicated that the Consumer Prices Index (CPI) — the UK’s key measure of inflation — eased to 3.0% in January, down from 3.4% in December and in line with most economist forecasts. This follows several months of slowing inflation, driven by softer increases in prices for transport, food and energy.

Analysts highlighted that falling petrol costs and cheaper airfares were significant contributors to the slowdown, alongside slower rises in everyday items such as bread and cereals. Although some categories, such as hotel and restaurant prices, saw modest increases, the overall trend points to easing price pressures that could benefit household budgets.

The January figure remains above the Bank of England’s 2% target but reinforces expectations that inflation is on a downward trajectory and could reach target levels by spring or early summer 2026. Investors and economists are now increasingly predicting that the Bank of England may cut interest rates as soon as its March meeting, potentially reducing the benchmark rate from 3.75% to 3.5% or lower.

Chancellor Rachel Reeves welcomed the data as a sign that government measures introduced last year — including reductions in energy costs and other living‑cost support — are helping to ease price pressures for households. Consumer spending, already under pressure from slower wage growth and a weakening labour market, could receive a further boost if inflation continues to moderate.

Despite the positive inflation news, other economic indicators remain mixed. The UK economy showed very modest growth at the end of 2025, and the unemployment rate has risen to its highest level in several years, adding complexity to the broader economic picture. Policymakers will need to balance progress on inflation with concerns about jobs and growth as they consider future monetary policy moves.

For consumers, the slowdown in price increases may start to ease the financial pressure of high living costs, particularly on essentials such as food and fuel. However, many households are still feeling the effects of several years of above‑target inflation, and analysts caution that sustained improvement will be needed before real gains in living standards are widely felt.

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