UK inflation falls to 3%, boosting hopes of early cut in interest rates

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. Photograph: Yui Mok/PA

UK inflation tumbled to 3% in January, giving a boost to hopes of an early cut in interest rates by the Bank of England.

The slowdown was in line with a majority of City economists’ forecasts and marks the lowest level since March 2025.