UK inflation dropped to 3.0% in January 2026, driven by lower petrol and food prices, boosting hopes for a rate cut in March.

UK inflation fell to 3.0% in January 2026, the lowest since March 2025, driven by declining petrol and food prices, with petrol dropping 3.1p per litre and food inflation easing to 3.6% from 4.5%. The drop, in line with forecasts, supports expectations that inflation will reach the Bank of England’s 2% target by April, increasing chances of a rate cut in March. While services inflation remained elevated at 4.4%, core inflation eased to 3.1%. Chancellor Rachel Reeves credited government policies, including energy bill reductions and frozen rail and prescription fees, for progress, though opposition figures blamed Labour’s economic management for persistently high inflation.