The Office for National Statistics (ONS) has today (18 February) reported that UK inflation fell to 3% in the year to January.
The figures are a reflection, in part, of the price of bread and cereals, the ONS added, and represent a fall from December’s 3.4% rate. However, the rate still remains above the Bank of England’s 2% target.
James Walton, chief economist at the Institute of Grocery Distribution (IGD), said in response: “The 0.9% drop in food and drink inflation from December to January was larger than IGD expected and played a major role in reducing overall inflation to 3%. This will offer some relief to households.
“Food prices are set to stay volatile, however. Commodity markets remain unpredictable, business costs continue to rise, and recent severe weather adds further uncertainty. These create planning challenges for suppliers and retailers alike.
“Resilient supply chains are key to a long-term solution. Progress is underway, but until deeper structural reform is delivered, the risks of renewed inflation will stay elevated. In short, food inflation has eased, but volatility will define much of 2026.”
In addition, the ritish Retail Consrtium (BRC) also responded. Harvir Dhillon, an economist at the BRc, said: “This improvement reflects intense competition between retailers, who continue to try and absorb higher costs wherever possible to keep prices down.
“However, margins remain razor thin and the cumulative burden of taxation and regulation on consumer-facing industries is rising. Retailers continue to face high labour costs, and the additional complexity associated with the Employment Rights Act risks adding to existing pressures.
”Without careful implementation, retailers’ ability to shield customers from higher prices, as well as to invest and create jobs, will be limited.”
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