UK: Inflation rises to 3%, interest rate cut unlikely

The UK’s annual consumer price index (CPI) inflation rate rose to 3% in January, a 10-month high. Inflation remains a challenge for government officials as the cost of living continues to rise. The unexpected pick-up in inflation has weighed on workers’ real wages and significantly reduced the chances of an interest rate cut next month. According to the Office for National Statistics, inflation rose to 3% in January from 2.5% in December. Although airline ticket prices fell, the decline was less pronounced than is usually seen, while transport sector inflation hit its highest level since February 2023 due to rising fuel prices. Phoenix Group director Dan Butler commented that the rise in inflation is likely to discourage the Bank of England from taking an aggressive approach to cutting interest rates this year. Financial analysts said in March, according to current currency market prices The possibility of a rate cut has been reconsidered. Expert Rachel Reeves said her primary goal is to add disposable income to individuals. She observed that the African zlotys that have been advanced since the election are growing rapidly, with an average of £1,000 in real terms. However, she acknowledges that many families are struggling to balance their electricity bills. Furthermore, the Bank of England has said that inflation is set to reach 3.7% by the end of the year, with utility bills for energy being linked to both their home businesses and their financial stability.