Unexpected sharp rise in inflation

The rising cost of food and non-alcoholic drinks resulted in a sharp rise in January’s inflation figures.

UK inflation jumped from 2.5% to 3% in January – its highest annual rate since March last year.

The latest figures from the ONS indicate the rise was driven by air fares not falling as much as usual at this time of year, while meat, bread and cereals increased in price.

ONS Chief Economist, Grant Fitzner said private school fees were another factor, as new VAT rules meant prices rose nearly 13% this month.

Looking specifically within the food and non-alcoholic beverages category, prices rose by 3.3% in the year to January 2025, up from 2.0% in December 2024. Prices for this division rose by 0.9% in January 2025, up from a monthly fall of 0.4% a year ago.

It is worth noting, the annual rate of 3.3% in January 2025 compares with 7.0% to January 2024.

Upward contributions to the change in the annual rate of inflation between December 2024 and January 2025 came from seven of the 11 food and non-alcoholic beverages classes. Notably they were in meat (0.04 percentage points); bread and cereals (0.03 pp); fish (0.01 pp); milk, cheese and eggs (0.01 pp); sugar, jam, honey, syrups, chocolate and confectionery (0.01pp); coffee, tea and cocoa (0.01pp); and mineral waters, soft drinks and juices (0.01pp).

The other four classes were little changed.

Meanwhile, in the alcoholic beverages division, there was a small downward effect on all the items 12-month rate change, due to spirits and wine, with prices overall rising this year by less than a year ago. In the tobacco category, there was a negligible overall effect on the all items 12-month rate change.