2026-02-19 03:57:00
U.K. CPI eased to 3.0% year-on-year in January 2026, down from 3.4% in December last year. This marked its lowest reading in ten months, as lower fuel prices and cheaper airfares weighed heavily on the headline figure.
On a monthly basis, CPI fell 0.5% in January 2026, compared with a decline of just 0.1% a year earlier. The broader CPIH measure — which includes owner-occupiers’ housing costs and is considered the ONS’s most comprehensive inflation gauge — fell to 3.2% annually, down from 3.6% in December.
Key points from the U.K. CPI Report
- Headline CPI: 3.0% year-on-year (January 2026), down from 3.4% in December 2025
- Monthly CPI: -0.5% in January 2026, compared with -0.1% in January 2025
- Core CPI (ex-energy, food, alcohol, tobacco): 3.1%, down from 3.2% — the lowest since September 2021
- CPI goods inflation: 1.6%, down from 2.2% in December
- CPI services inflation: 4.4%, down from 4.5% in December
- RPI: 3.8% annually, down from 4.2% — the all-items index fell from 408.5 to 406.4
The single largest contributor to the monthly decline was the transport division, where prices fell 1.8% on the month compared with only a 0.5% decline a year earlier. Petrol prices dropped 3.1 pence per litre between December 2025 and January 2026, reversing a 0.8p rise seen in the same period a year earlier.
Airfares added a notable secondary downward effect. Fares typically spike in December and unwind in January, which saw a decline of roughly 26.5% on the month.
Link to official ONS U.K. Consumer Price Index (January 2026)
In addition, private school fees provided a meaningful downward contribution in January 2026. Fees rose sharply by 12.7% a year earlier when VAT was applied to private school tuition for the first time. No equivalent price change occurred in January 2026, producing a sizeable base effect that dragged on the annual rate.
Food and non-alcoholic beverages fell 0.1% on the month, also a notable change from a rise of 0.9% a year earlier.
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Market Reactions
British Pound vs. Major Currencies: 15-min
GBP Overlay 15-min – Chart Faster with TradingView
Sterling’s reaction to the data was mixed across the major currency pairs, reflecting a degree of divergence in how markets interpreted the CPI print relative to recent recalibration of the Bank of England’s policy path.
GBP immediately weakened against CHF (-0.34%) and USD (-0.45%), sustaining its steady selloff in the hours that followed the release. Sterling also chalked up gradual declines against EUR (-0.08%) and AUD (-0.12%) but managed to trim losses as the session went on.
On the flip side, the U.K. currency barely dipped against JPY (+0.15%) while also fighting to stay afloat against NZD (+0.11%).
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