Inflation Data Sends Key Signal
The latest figures from the UK Office for National Statistics show consumer price inflation eased to 3% YoY in January, down from 3.4% the previous month. This marks the lowest level since March 2025 and provides a crucial indicator for the Bank of England's upcoming policy decisions.
Fuel Prices Drive Down Inflation
A major factor behind the decline was a sharp drop in fuel prices. Data shows the average price of gasoline fell by 3.1 pence per liter between December 2025 and January 2026, significantly pulling down the overall inflation rate.
Service Sector Inflation Slightly Above Expectations
While headline inflation came in lower than expected, service sector inflation stood at 4.4%, slightly above the market forecast of 4.3%. This suggests that price pressures in the services industry remain more persistent than anticipated.
Potential Policy Shift in March
This inflation report is the last major economic data release before the Bank of England's policy meeting on March 19. Analysts believe the figures could encourage dovish members of the Monetary Policy Committee to push for a rate cut to support the economy.