UK Inflation Rate Steady at 3%

The annual inflation rate in the UK steadied at 3% in February 2026, the same as in January and in line with expectations. Clothing made the largest upward contribution, with prices rising 0.9%, the first increase in four months. Prices normally rise in February as the spring product ranges start to enter the shops. Prices also rose at a faster pace for housing and utilities (4.6% vs 4.5%). On the other hand, inflation slowed for transport (2.4% vs 2.7%), with the average price of petrol falling by 1.6 pence per litre between January and February 2026, compared with a rise of 2.0 pence per litre last year. A slowdown was also seen for food (3.3% vs 3.6%), recreation and culture (2.5% vs 2.6%), and restaurants and hotels (4% vs 4.1%). Services inflation also edged down to 4.3% from 4.4%. Compared to the previous month, the CPI rose 0.4%, recovering from a 0.5% fall in January and matching forecasts. Annual core inflation unexpectedly edged up to 3.2% from 3.1%.

UK consumer price inflation eased to 3.0% in January 2026, down from 3.4% in December and in line with market expectations. This marks the lowest annual inflation rate since March 2025, primarily driven by softer increases in transport and food prices. Transport costs rose by 2.7% year-on-year, slowing from 4.0% in December, as fuel prices fell and air fare inflation moderated. Meanwhile, food and non-alcoholic beverage prices increased by 3.6%, down from 4.5% the previous month. Inflation also eased in housing and utilities (4.5% vs. 4.9%) and recreation and culture (2.6% vs. 2.7%). However, price growth in restaurants and hotels accelerated to 4.1%, up from 3.8%. Core inflation, which excludes more volatile components such as food and energy, declined to 3.1% in January, its lowest level since August 2021, suggesting underlying price pressures are gradually moderating. On a monthly basis, consumer prices fell by 0.5%, reversing a 0.4% increase recorded in December.

UK consumer price inflation rose to 3.4% in December 2025, up from November’s eight-month low of 3.2% and slightly above market expectations of 3.3%. This year-end acceleration, the first since July, could complicate the Bank of England’s efforts to guide inflation back toward its 2% target, though the rise is expected to be temporary thanks to government interventions. The increase was largely driven by higher prices for alcohol and tobacco, which jumped to 5.2% from 4.0% in November due to the timing of tobacco duty changes, and transport costs, which rose to 4.0% from 3.7% on the back of higher airfares. Additional upward pressure came from food and non-alcoholic beverages (4.5% vs. 4.2%). Services inflation, a key gauge of domestic price pressures for the BOE, edged up slightly to 4.5% from 4.4%, below expectations. Core inflation, which excludes volatile items like unprocessed food and energy, remained steady at 3.2%, marking its lowest level since December 2024.