IoD press release Welcome drop in inflation creates hope for March rate cut
Commenting on today’s data from the Office for National Statistics that showed the annual rate of CPI inflation falling to 3.0% in January 2026, from 3.4% in December 2025, Anna Leach, Chief Economist at the Institute of Directors, said:
“This expected decline in inflation marks the start of a more benign inflationary trend for the UK. Today’s figures bring CPI back into the Bank of England’s target range for the first time in 10 months. With the unemployment reaching 5.2% – which is the highest since 2015 when you exclude the pandemic – today’s inflation number should help incline minds at the Bank of England towards a rate cut in March.
“Inflation is set to fall rapidly in the coming months, stabilising costs for households and supporting real household incomes. This, alongside further falls in interest rates, may finally shift households into spending, giving the economy some much needed support. However, the outlook for the labour market is more concerning. Rising unemployment – particularly among young people – may yet keep the breaks on the economy.”
