Overview
- Official ONS data show CPI slowed from 3.4% in December to the lowest rate since March 2025, led by cheaper petrol, airfares and food.
- Core inflation eased to about 3.1% while services inflation held at roughly 4.4%, a gauge closely watched by the Bank of England.
- Investors now price a high probability of a quarter-point cut to 3.5% at the 19 March MPC meeting following the latest figures.
- Labour market data point to softer pressures, with unemployment at 5.2% in the three months to December and regular pay growth down to 4.2%.
- Growth remains weak, as GDP rose only 0.1% in the fourth quarter of 2025, leaving annual expansion at about 1.3%.