London Daily

Focus on the big picture.
Friday, Aug 28, 2026

Signs of hope on inflation despite slow price falls

Signs of hope on inflation despite slow price falls

City Comment: There are good reasons to think the worst of the inflation firestorm may well be over
The inflation supertanker can seem agonisingly slow to turn.

Another slight fall in the annual CPI rate to 10.1% in January is progress for sure but the headline figure is a mere percentage point below the October peak.

And at the supermarket checkouts and in the energy bills coming in for January the cost-of-living crisis feels as intense as ever.

Yet there are good reasons to think the worst of the firestorm may well be over as winter turns to spring. Prices actually fell 0.6% in January and core inflation, stripping out food and energy prices, was far better than expected by the markets at an annual rate of 5.8%, down from 6.3% in December.

Looking at the energy markets that lit the inflation fuse there are more reasons to be optimistic. The wholesale gas contract price for March dipped below 130p a therm yesterday for the first time since December 2021.

Although it is still well above the 50p level that was typical before the pandemic, the direction of travel remains encouraging. Domestic energy tariffs will rise again in April — although they will be capped by the Government’s £3,000 energy price guarantee — but after that they should start falling away.

With inflation still running at five times the Bank of England’s target rate it seems reasonable to assume — as the markets have — that one last rate rise, probably of a quarter point, is on the cards for March.

When Jeremy Hunt got the call to 11 Downing Street last autumn it was against a backdrop of chaos that had continued almost without a break for six years.

But barring another bolt-from-the-blue disaster it does appear that the economy is heading for calmer waters — business is finally getting the stability it has craved for so long.

It will allow the Chancellor to sound a more cheery note than he might have dared hoped for when he stands up to deliver his Budget a month from today
Newsletter

Related Articles

0:00
0:00
Close
Nearly 23,000 UK Households Expected to Move Home on Busiest Day of 2026
UK Benefit Payments to Arrive Early Ahead of August Bank Holiday
Reform UK Pledges to Replace GDPR and Cut Tax Administration Red Tape
Andy Burnham Launches Work Experience Plan for One Million Young People Outside Education or Work
Andy Burnham Faces Labour Backlash After Dropping Support for Political Donations Cap
Andy Burnham Announces UK-Wide Summit With Leaders of Scotland, Wales and Northern Ireland
Met Office Warns of Heavy Rain and Flood Risk Across England and Wales After Summer Heat
Bank of England Warns AI Adoption Could Reduce Demand for Automatable Jobs
UK Confirms National Salmonella Outbreak With More Than 200 Cases
UK Airports Handle Record 81 Million Passengers Despite Middle East Disruption
Ofgem Raises UK Energy Price Cap by Four Percent to £1,723
Cyber Attack Hits Customer Data Systems at Manchester, Stansted and East Midlands Airports
TSA Unveils Major Airport-Security Overhaul as It Drops Gold+ Privatization Plan
CIA Chief Warned Russia Against Attacking NATO in Secret Moscow Mission
Raheem Sterling Charged With Dangerous Driving After Lamborghini Crash
The Secret Dolly Parton Kept Until Her Death: "She Was Much Sicker Than She Let On"
Middlesbrough House Fire Kills Woman and Seven-Year-Old Girl
Prince Harry and Meghan Markle Return to UK Amid Renewed Media Attention
Raheem Sterling Charged With Dangerous Driving After London Collision
Greenpeace Threatens Legal Action Over Crown Estate Offshore Wind Leasing
Nvidia Revenue Surges to Ninety-Six Point Two Billion Dollars on Artificial Intelligence Demand
Meta Agrees to Global Youth Safety Changes Following Multi-State Legal Settlement
UK Government Plans Autumn Summit With Scottish, Welsh and Northern Irish Leaders
CMA Caps Veterinary Prescription Fees at Twenty-One Pounds
Thames Water Pilot Records Forever Chemicals at Thirteen Times the Legal Limit
Kent Meningitis Outbreak Reaches Thirty-Four Confirmed Cases
Forty Children Missing From UK Asylum Accommodation Remain Unaccounted For
UK Court Upholds VAT on Private School Fees
US Designates Palestine Action as Foreign Terrorist Organization
UK Approves Massive New Chinese Embassy Complex in London Amid Security Concerns
Prime Minister Andy Burnham Visits Kyiv and Offers Cruise Missile Designs to Ukraine
Glacier Collapse, Not Earthquake, Triggered Deadly Nepal-Tibet Flood
Andy Burnham Drops Plan to Cap Political Donations
Conservative Leadership Contest Intensifies as Robert Jenrick Attacks Kemi Badenoch
French-Born Defence Secretary Wes Streeting Condemns Homophobic Abuse Since Taking Office
UK Government Delays Commercial Robotaxi Rollout in London Over Regulatory Gaps
NHS Complaints About Autism and ADHD Care Waiting Times Triple Over Five Years
UK Government Launches 10,000 Work Placements for Young People With Sainsbury's
NHS England to Offer Free At-Home Cervical Cancer Screening Kits
EU Biometric Border Checks Cause Delays of Up to Five Hours for British Travellers
US Imposes Economic Sanctions on UK-Based Protest Group Palestine Action
Two Planned UK Datacentres Could Produce More Annual Carbon Emissions Than ExxonMobil's Entire UK Operation
London Surgeons Complete First Artificial Intelligence-Assisted Brain Tumour Removal
UK Services Growth Rebounds as Consumer Confidence Reaches Two-Year High
Ofgem Confirms Four Percent October Energy Price Cap Increase for UK Households
Government Considers Insolvency Law Changes to Bring Thames Water Into Public Ownership
Andy Burnham Signs Artificial Intelligence Defence Pact During Visit to Kyiv
Church of England Faces Renewed Scrutiny Over Historical Safeguarding Failures
Reform UK Proposes £30 Tax Credit for Long HMRC Telephone Queues
Greater Manchester Secures More Than £100 Million to Upgrade Victorian Railway Stations
×