The rate of UK inflation went up by more than expected in January. The Consumer Prices Index rose by 3% on an annual basis, compared to 2.5% in December. Analysts had been forecasting a reading of 2.8%.
The higher headline figure was largely driven by a bounce in airfares and higher prices for food and non-alcoholic beverages. The addition of VAT to private school fees also pushed educational costs up.
CPI data is published once a month, with the next report (covering February) due on Wednesday, 26 March. Eleven more reports will be published covering 2025.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
“Inflation is now 1% away from target and heading in the wrong direction, and consumers better buckle up for prices to trend higher throughout this year,” said Laith Khalaf, head of investment analysis at investment platform AJ Bell.
“The Bank of England reckons inflation will hit 3.7% in the third quarter, and that’s without a potential tariff shock stemming from US trade policy,” he added.
We share a list of this year’s CPI dates before delving further into the inflation outlook for 2025.
Next UK inflation figures
In the UK, the main measure of inflation is the Consumer Prices Index. The Office for National Statistics (ONS) releases this once a month. Each reading covers the previous month.
Release dates for 2025
- 15 January (covering December)
- 19 February (covering January)
- 26 March (covering February)
- 16 April (covering March)
- 21 May (covering April)
- 18 June (covering May)
- 16 July (covering June)
- 20 August (covering July)
- 17 September (covering August)
- 22 October (covering September)
- 19 November (covering October)
- 17 December (covering November)
- 21 January 2026 (covering December)
What time is CPI released in the UK?
The ONS releases the latest CPI data at 7.00am once a month. You can access the data by going onto the ONS website and clicking on its release calendar. All published and upcoming releases are listed there. The report will be titled, “Consumer price inflation, UK”, followed by the month and year in question.
MoneyWeek regularly reports on the latest inflation data and what it means for you.
What is CPI and how is it calculated?
As introduced previously, CPI is the main measure of inflation used in the UK. It tells you how much the cost of living is going up or down. It is calculated using a typical basket of household goods and services – from eggs, flour and milk to hotel costs, vinyl records and air fryers. Vinyl records were re-added to the CPI shopping basket last year for the first time since 1992 after a resurgence in popularity.
The Bank of England keeps a close eye on CPI when setting interest rates. If inflation is too high, the Bank raises interest rates to slow consumer spending and cool the economy. This works in bringing prices down because households have less money to spend when mortgage rates are high and debts are more expensive to repay.
Meanwhile, if inflation is too low, the Bank may reduce interest rates so that consumers have more disposable income to spend. Due to the laws of supply and demand, this pushes prices back up.
Where is inflation heading next?
The path ahead is unlikely to be completely straight. Household energy costs are expected to rise in the first half of 2025, for example, which could add upward pressure.
The Ofgem price cap increased by 1.2% in January, and is expected to rise again in April. The latest forecast from consultancy Cornwall Insight suggests the cap could go up by as much as 5%. “While we’re not seeing a return to the peak of the energy crisis, the market is more volatile than it has been in quite some time, and households are bearing the brunt of cold weather and low gas storage levels across Europe,” said Dr Craig Lowrey, Cornwall Insight’s principal consultant.
The rise in employers’ National Insurance contributions from April, combined with a 6.7% increase to the National Living Wage, could also push inflation higher. Some businesses have indicated they are looking to pass these costs on to consumers by raising their prices.
Further afield, US president Donald Trump has already started imposing tariffs on imported products and there are fears this could add to global inflationary pressures if other countries respond and it turns into a full-blown trade war.
US inflation also unexpectedly rose to 3% in January. At this stage, it is too early for the inflationary effect of tariffs to be showing up in the data, but experts have warned that each time the average tariff rate goes up by one percentage point, the rate of core US inflation goes up by around 0.1 percentage points.
In the UK, the Bank of England is now forecasting that inflation will hit 3.7% in the third quarter of 2025, although this bump is expected to be relatively short-lived. Furthermore, it will be driven by higher global energy prices rather than domestic pressures. The Bank maintains that domestic price pressures are starting to look a lot better.
Speaking at the latest MPC press conference, the governor of the Bank of England Andrew Bailey said: “With the underlying disinflationary process well underway and a continued restrictive stance of monetary policy in place, we can be reasonably confident that the pickup in inflation we see ahead of us will be temporary and much smaller and less prolonged than the one we have just put behind us.”
-
How much should I have in emergency savings?When your boiler breaks or your car won’t start, you can find yourself paying a hefty bill. How much should you have in emergency savings to cover unexpected costs?
-
ISA investments by age: should I invest more in my stocks and shares ISA?Stocks and shares ISAs are a great way to grow long-term wealth, but are they overlooked compared to cash savings? We look at the average ISA investment by age and if you should have more.
