UK Inflation Rate Accelerates More than Expected
The annual inflation rate in the UK accelerated sharply to 3% in January 2025, the highest since March 2024, from 2.5% in the previous month and above forecasts of 2.8%.
The largest upward contributions came from transport (1.7% vs -0.6%), mostly upward effects from air fares and from motor fuels, partially offset by a downward effect from secondhand cars; and food and non-alcoholic beverages (3.3% vs 2.5%), mostly meat and bread and cereals.
Prices also increased at a faster pace for recreation and culture (3.8% vs 3.4%) and education (7.5% vs 5%) due to inclusion of 20% value-added tax on private school fees. Services inflation rose to 5% from 4.4% in the previous month but was below the BoE's prediction of 5.2%.
Meanwhile, prices slowed for restaurants and hotels (3.3% vs 3.4%), housing and utilities (2.1% vs 3.1%). Annual core inflation rose to 3.7% from 3.2%, matching forecasts. Compared to the previous month, the CPI declined 0.1%, less than forecasts of a 0.3% drop.
Source: Trading Economics
