Inflation slows to 10-month low amid easing petrol and food costs

The rate of Consumer Prices Index (CPI) inflation decreased to 3% in January from 3.4% in December.

Lower food prices helped push inflation down (Aaron Chown/PA) (PA Archive)

UK inflation has eased to its lowest since March last year on the back of falling petrol prices and slower food price increases, according to official figures.

The rate of Consumer Prices Index (CPI) inflation decreased to 3% in January from 3.4% in December, the Office for National Statistics (ONS) said.

The reading was in line with the predictions of economists and puts inflation back on a downward trajectory after an increase in the previous month.

Data showed that motor fuels particularly contributed to the fall of inflation, with the average price of petrol falling by 3.1p per litre between December 2025 and January 2026.

The average price of petrol stood at 133.2p per litre in January, down from 137.1p per litre in the same month a year earlier.

Meanwhile, diesel prices also dropped, falling by 3.2p per litre compared with the previous month.

ONS chief economist Grant Fitzner said: “Airfares were another downward driver this month with prices dropping back following the increase in December.

“Lower food prices also helped push the rate down, particularly for bread & cereals and meat.

“These were partially offset by the cost of hotel stays and takeaways.”

The ONS reported that food and non-alcoholic drink price inflation slowed from 4.5% in December to 3.6% last month.

It also meant that prices were 0.1% cheaper in January than in December, after a drop in the cost of bread and cereals.

Recent price increases in alcohol and tobacco also slowed from 5.2% in December to 4.6% in January.

However, this was partly offset by a rise in hotel prices, with accommodation inflation rising to 1.1% for the month after a 0.1% dip in December.

The broader easing of inflation will provide some relief for the Chancellor Rachel Reeves, amid efforts by the Bank of England to bring inflation back to the target level of 2%.

Economists said on Wednesday that the latest reading keeps inflation on track to drop to 2% by April and has also lifted hopes that central bankers will cut interest rates next month from their current rate of 3.75%.

Thomas Pugh, chief economist at RSM UK said: “The sharp drop in inflation in January all but nails on a rate cut next month following yesterday’s weak labour market data.

“What’s more, today’s drop was just the start of a steep slide that should take inflation to 2% in April, which will set the stage for another interest rate cut in the summer.”

Chancellor Rachel Reeves said: ”Cutting the cost of living is my number one priority.

“Thanks to the choices we made at the budget we are bringing inflation down, with £150 off energy bills, a freeze in rail fares for the first time in 30 years and prescription fees frozen again.

“Our economic plan is the right one, to cut the cost of living, cut the national debt and create the conditions for growth and investment in every part of the country.”

Shadow chancellor Mel Stride said: “Inflation remains above target thanks to Labour’s choices.

“Families are still feeling the pinch because of Labour’s economic mismanagement.”