Closing post
Time to wrap up….
City investors are betting on a cut to UK interest rates next month, after inflation fell to its lowest level in 10 months this morning.
A March rate cut is now seen as an 80% chance by the money markets, after CPI inflation dropped to 3% in January.
The slowdown was in line with a majority of City economists’ forecasts and marks the lowest level since March 2025.
The Office for National Statistics (ONS) said that falls in petrol prices, air fares and food had driven the drop.
In a welcome boost for households’ shopping budgets, the rise in prices for food and non-alcoholic drinks slowed sharply to 3.6% in the year to January, down from 4.5% in December, and reaching a nine-month low.
Petrol and diesel prices fell by 2.2% over the year compared with a 0.9% rise last year. The average price of petrol fell by 3.1p a litre between December and January to stand at 133.2p a litre, while diesel fell by 3.2p to stand at 142.5p a litre.
Several economists predicted the fall in inflation, after a rise in unemployment yesterday, would nudge the Bank of England into cutting borrowing costs at its next meeting.
Others, though, suspect the Bank may wait until April, with services inflation still looking sticky.
Seperate data showed that house price inflation, and rising rents, have slowed, with property prices falling in London, particularly in inner districts of the capital.
Wall Street’s main share indexes have opened higher, supported by gains in technology stocks as the AI worries that hit the sector in recent sessions ease.
The Dow Jones Industrial Average is up 123 points or 0.25% at 49,657.15 points in eary trading.
The broader S&P 500 share index gained 0.2% and the tech-focused Nasdaq Composite rose by 0.28%.
