Displaying items by tag: inflation rate

The UK inflation rate has fallen to 3% in the year to January, down from 3.4% in December, according to the ONS. Economists had predicted the drop, which was driven partly by lower prices for bread, cereals, petrol, meat, and airfares. However, inflation remains above the Bank of England’s 2% target, meaning prices are still rising, just more slowly. Rachel Reeves said government decisions in the November Budget are helping ease pressure on households, while Keir Starmer described cutting the cost of living as his top priority. Critics argue many families are still struggling, pointing to higher unemployment and ongoing business pressures. Some small business owners say transport, employment, and ingredient costs continue to squeeze margins. Energy bills may also fall this spring, with forecasts suggesting a 7% drop in the price cap. Analysts now believe the downward trend could prompt an interest rate cut in March. While the direction is encouraging, many households remain mindful that prices are still significantly higher than five years ago.

The IMF has forecast that the UK will be the second-fastest-growing economy among the G7 nations this year - behind only the USA - despite ongoing global trade tensions. The IMF projects UK growth at a modest 1.3% in both 2025 and 2026, signaling resilience but also stagnation compared with past performance. Per capita growth, at less than 0.5%, remains the weakest in the G7. Inflation, however, continues to cloud the outlook: the UK is expected to record the highest price rises among advanced economies, driven by elevated energy and utility costs. The IMF anticipates inflation will ease to 2% by late next year, yet households still face financial strain. Rachel Reeves, attending the IMF’s Washington meetings, pledged to tackle what she called a ‘stuck’ economy, while the Bank of England urged caution on rate cuts. Amid geopolitical uncertainty and trade disruptions, Britain’s challenge is how to sustain growth without deepening inequality. Reeves has recently hinted that she may raise some taxes in the November budget: see