In January, UK inflation decreased to a near one-year low of 3%, the lowest rate since March 2025, reflecting a significant drop from the 3.4% rate recorded in December. This decline aligns with the forecasts of many economists who anticipated a fall in inflation rates due to various factors influencing the price landscape. Key contributors to this decrease included reduced costs in petrol and food, alongside lowered airfares, which are critical elements in the cost of living for consumers.

The Office for National Statistics (ONS) highlighted that the average price of petrol saw a reduction of 3.1 pence per litre between December 2025 and January 2026, suggesting a favorable trend for consumers who have been struggling with high living costs. The downward trajectory in inflation rates is pivotal for the government's economic policy and overall public sentiment, especially in light of the ongoing cost of living crisis that has affected many households across the UK.

Reacting to these updates, the Chancellor emphasized that cutting the cost of living has become a top priority for the government. She noted that measures implemented in the recent budget, including reductions in energy bills and freezes on rail fare and prescription fees, were instrumental in achieving the current inflation drop. The government is optimistic that their economic strategies will continue to alleviate financial pressures on families, reflecting a commitment to fostering a stable and affordable economic environment for UK residents.