In the UK, annual inflation rose to 3% in January, reaching its highest level in 10 months. Inflation in the country exceeded the Bank of England’s 2% target.

According to data from the UK National Statistics Office (ONS), the annual inflation rate, which was 2.5% in December 2024, increased to 3% in January. This pushed inflation in the country above the 2% target set by the BoE, reaching its highest level since March 2024. Market expectations were for annual inflation to rise to 2.8% in January. On a monthly basis, inflation in the country showed a decrease of 0.1%. ONS stated that alcoholic beverages and tobacco products, which saw above-average increases, were the major contributors to the annual price hikes. Sharp increases were also observed in airfare, food, and private school fees. Communication and healthcare prices also saw above-average increases. Excluding fluctuations in energy and food prices, the core inflation rate rose from 3.2% to 3.7%.

WILL THERE BE A RATE CUT? The Bank of England (BoE) lowered its policy interest rate by 25 basis points to 4.50% on February 6, the third decrease since August 2024. BoE Governor Andrew Bailey announced a “gradual and cautious approach” for further interest rate cuts. The next interest rate decision meeting of the Bank of England will be held on March 20. BoE expects inflation in the country to peak at 3.7% in the third quarter of this year.