UK inflation: Why a small drop matters to you

Published On Jan 15, 2025, 6:16 AM

UK inflation has decreased slightly from 2.6% to 2.5%, driven mainly by lower hotel prices and moderated airfare increases. More importantly, core inflation, which excludes energy and food costs, has fallen to a four-year low of 3.2%. This drop could pave the way for interest rate cuts by the Bank of England. However, uncertainties persist, including potential tariffs under President-elect Trump and upcoming increases in National Insurance Contributions and minimum wage. While inflation pressures appear muted currently, fluctuations could emerge in the future, particularly due to these factors.