Food Inflation Eases as Headline Rate Drops in January

The ONS has published inflation data for January 2026.

Main points:

• The Consumer Prices Index including owner occupiers' housing costs (CPIH) rose by 3.2% in the 12 months to January 2026, down from 3.6% in the 12 months to December 2025.
  
  
• On a monthly basis, CPIH fell by 0.3% in January 2026, while it was little changed in January 2025.
  
  

• The Consumer Prices Index (CPI) rose by 3.0% in the 12 months to January 2026, down from 3.4% in the 12 months to December 2025.

• On a monthly basis, CPI fell by 0.5% in January 2026, compared with a fall of 0.1% in January 2025.

• Transport, and food and non-alcoholic beverages made the largest downward contributions to the monthly change in both CPIH and CPI annual rates.
  
  

• Core CPIH (CPIH excluding energy, food, alcohol and tobacco) rose by 3.3% in the 12 months to January 2026, down from 3.5% in the 12 months to December 2025; the CPIH goods annual rate fell from 2.2% to 1.6%, while the CPIH services annual rate fell from 4.5% to 4.3%.

• Core CPI (CPI excluding energy, food, alcohol and tobacco) rose by 3.1% in the 12 months to January 2026, down from 3.2% in the 12 months to December 2025; the CPI goods annual rate fell from 2.2% to 1.6%, while the CPI services annual rate fell from 4.5% to 4.4%.

Commentary

BRC:

Responding to the latest CPI inflation figures, which show headline inflation falling to 3.0% and food inflation falling to 3.6%, Harvir Dhillon, Economist at the British Retail Consortium, said:

Headline inflation stood at 3.0% in January, driven partly by food inflation easing to 3.6%, offering some relief for struggling households. Shoppers will have been pleased to see the price of clothing, footwear and furniture dropping significantly on the month as a result of heavy discounting by retailers during the January sales. And there was further good news for customers as staples such as bread, cereals and rice all fell in price on the month. 

This improvement reflects intense competition between retailers, who continue to try and absorb higher costs wherever possible to keep prices down for customers. 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.

CBI:

Martin Sartorius, Lead Economist, CBI, said:

“Inflation ticked down in January, broadly in line with the Bank of England’s projections. We expect this downward momentum to continue in the coming months, reflecting the fading impact of last year’s energy and utility price increases.

“January’s slowdown in inflation, alongside cooling labour market conditions, increases the likelihood that the Monetary Policy Committee will cut rates again over the next couple of months. Beyond then, the scope for further Bank Rate reductions will become more limited, as the Committee looks to ensure that inflation returns sustainably to the 2% target.”

Source : BRC; CBI

Image : sergeyryzhov / iStock / 517010420

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