In January 2025, the United Kingdom's Consumer Prices Index (CPI) rose to 3.0%, up from 2.5% in December 2024, marking the highest rate in ten months.

This increase was primarily influenced by rising food prices, air fares, and the introduction of a 20% Value Added Tax (VAT) on private school fees.

Food prices saw notable hikes, with staples such as meat, eggs, butter, and cereals becoming more expensive compared to the previous year.

Additionally, air fares experienced a smaller-than-usual decrease in January, contributing to the overall inflation rate.

The implementation of VAT on private school fees from January 1st led to a significant rise in education costs, further impacting the inflation figures.

This unexpected surge in inflation presents challenges for the Bank of England's monetary policy, as it surpasses the 2% target and may influence future interest rate decisions.

Households are also preparing for upcoming increases in energy and water bills, which are expected to further affect the cost of living in the coming months.