In the UK, annual inflation rose to 3% in January, reaching a 10-month peak. Inflation in the country exceeded the Bank of England’s 2% target.

According to data from the Office for National Statistics (ONS) in the UK, the annual inflation rate, which was 2.5% in December 2024, increased to 3% in January. Thus, inflation in the country surpassed the Bank of England’s target of 2% and reached its highest level since March 2024. Expectations in the market 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 that saw above-average increases contributed the most to the annual price increase. Sharp increases were observed in airfare, food, and private school fees. Communication and healthcare services also saw above-average price increases. The core inflation rate, excluding fluctuations in energy and food prices, rose from 3.2% to 3.7%.

WILL THERE BE A RATE CUT? The Bank of England (BoE) lowered its policy interest rate for the third time by 25 basis points to 4.50% on February 6, the first time 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. The BoE expects annual inflation in the country to peak at 3.7% in the third quarter of this year.