Britain Sees Lowest Inflation Rate in Months

(MENAFN) Britain's inflation rate retreated sharply in January, hitting its lowest level in several months as easing price pressures across transport and food categories drove the headline figure down, fresh official data showed Wednesday.

The Office for National Statistics (ONS) reported that the Consumer Prices Index (CPI) rose 3.0 percent in the twelve months through January 2026, a notable pullback from the 3.4 percent recorded in December 2025. On a monthly basis, prices contracted by 0.5 percent — a steeper decline compared to the 0.1 percent dip seen in the same month a year ago.

ONS identified transport costs and food and non-alcoholic beverages as the primary forces dragging the annual rate lower, delivering the most significant downward contributions to the overall index.

Underlying price pressures also softened. Core CPI — which strips out volatile categories including energy, food, alcohol, and tobacco — slipped to 3.1 percent from 3.2 percent in December, while services inflation cooled to 4.4 percent from 4.5 percent the prior month.

The figures strengthen the case for an imminent pivot in monetary policy. The Bank of England held its benchmark interest rate steady at 3.75 percent earlier this month, though policymakers remain split over when to move ahead with further cuts as economic momentum shows signs of faltering.

Separately, the latest labour market data painted a subdued picture, with Britain's unemployment rate climbing to 5.2 percent in the fourth quarter of 2025 and wage growth tapering off — signals that demand-side pressures within the economy are continuing to moderate.

Economists broadly anticipate that the disinflationary trend will persist in the months ahead, with the Bank of England projecting that the headline rate will inch closer to its 2 percent target before the year is out.

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