UK CPI slowed from 3.4% yoy to 3.0% yoy in January, matching expectations and marking the lowest annual rate since March 2025. On a monthly basis, prices fell -0.5% mom, reflecting broad-based easing in several categories.
Core inflation, which excludes energy, food, alcohol and tobacco, edged down from 3.2% yoy to 3.1% yoy — the lowest level since late 2021. Goods inflation cooled more decisively, with the annual rate falling from 2.2% to 1.6%. However, services inflation — a key focus for the BoE — eased only marginally from 4.5% to 4.4%.
ONS Chief Economist Grant Fitzner noted that petrol prices were a major driver of the decline, alongside lower airfares and softer food prices, particularly bread, cereals, and meat. These were partly offset by higher costs for hotel stays and takeaways.
The data reinforce the disinflation trend, but sticky services inflation may keep policymakers cautious despite strengthening expectations for a March rate cut.
