Fuel and VAT on private school bills fuel the Consumer Prices Index
The UK's inflation rate rose to 3% in January, exceeding expectations and marking its highest level since March 2024. The Consumer Prices Index (CPI) increased from 2.5% in December, with notable rises in education (7.5%), food and beverages (3.3%), and services (5.8%). Core inflation, excluding volatile elements like food and energy, rose to 4.6%, its highest since March 2024. The Bank of England's target of 2.0% inflation is under strain, with further increases in water and energy bills expected to sustain higher inflation. The Monetary Policy Committee (MPC) recently cut interest rates from 4.75% to 4.5%, but the inflation rebound complicates hopes for further cuts.
