UK annual inflation exceeds expectations

The UK's annual inflation rate rose to a 10-month high of 3%, surpassing market expectations, according to data released by the Office for National Statistics (ONS) on Wednesday.

Markets had predicted the January figure to come in at 2.8%, compared to 2.5% in December 2024.

The primary drivers of the increase were transport, as well as food and non-alcoholic beverages, the ONS said in a statement.

Annual transport inflation reached its highest rate since February 2023 with 1.7% in January, shifting from a 0.6% decline in the previous month. This was mainly due to upward pressures from airfares and motor fuel prices, partially offset by a downward effect from secondhand car prices.

The cost of food and non-alcoholic beverages surged 3.3% in January, compared to a 2% increase in December.

Core inflation, which excludes volatile items such as energy, food, alcohol, and tobacco, accelerated to 3.7% in January from 3.2% in December.

On a monthly basis, the Consumer Prices Index (CPI) fell by 0.1% in January, reversing December's 0.3% increase and marking the first monthly decline in six months.

Core CPI also decreased by 0.4% on a monthly basis.