Inflation rose to 3% in January according to the latest Consumer Price Index (CPI) data from the Office of National Statistics (ONS), its highest level in 10 months.
The increase in the annual rate of inflation marks a 0.5 percentage point rise on December’s figure, and has exceeded economists expectations, which had anticipated a rise to 2.8%.
With price rises having slowed since their peak in 2022, inflation on food and drink products quickened from 1.9% to 3.1%. This category had previously been contributing to reducing inflation, and will also make the most recent uptick in inflation more noticeable for household incomes. Other sectors that contributed significantly to the latest rise in inflation include transport costs and education.
The Bank of England earlier this month opted to cut interest rates to help stimulate economic growth, arguing that domestic inflationary pressures in the economy including wage growth had slowed sufficiently. With inflation having risen more quickly than expected, the Bank’s Monetary Policy Committee is unlikely to make another cut at its next meeting, with some analysts, including the BBC’s International Business Correspondent Theo Leggett, indicated the Bank may be forced to change its approach and raise interest rates again in response. The extent to which US President Trump’s plans to impose tariffs on some imports will influence inflation has also yet to be seen.
Alongside the UK, other major economies have also recorded rising inflation in recent months. January estimates for France and Germany have indicated inflation at 1.8% and 2.8% respectively, up from 1.4% and 1.8% in September 2024 when inflation in the UK was also at its lowest rate since 2021.
