Financial News: UK Inflation Remains Stable At 3.0%

UK Inflation Remains Stable At 3.0%

03/25/2026 - 08:13:00 (RTTNews)

(RTTNews) - UK consumer price inflation remained stable in February, but potential spikes in inflation may prompt the Bank of England to keep the interest rates on hold for an extended period.

Consumer prices logged a steady growth of 3.0 percent in February, the Office for National Statistics said. The rate came in line with expectations.

Core inflation that excludes prices of energy, food, alcohol and tobacco rose to 3.2 percent from 3.1 percent in the prior month.

The annual growth in goods prices was unchanged at 1.6 percent, while services inflation eased slightly to 4.3 percent from 4.4 percent.

"CPI of 3% in February shows an economy yet to be impacted by the shock of the Middle East conflict, with fuel prices falling," British Chambers of Commerce Research Manager Stuart Morrison said. The war will delay the previously expected slowdown in inflation.

At current energy prices, inflation is likely to peak between 3.5 percent and 4 percent this autumn, ING economist James Smith said. "We can't rule out rate hikes if energy prices spike further, but our base case is a pause throughout 2026," Smith said.

Confederation of British Industry Lead Economist Martin Sartorius said the recent spike in global energy prices due to the Iran conflict could potentially delay the return to 2 percent inflation until next year, rather than this summer.

The bar for hiking interest rates is relatively high, given weak domestic activity and a cooling labor market, the economist noted. However, it cannot be ruled out if the situation in the Middle East deteriorates significantly further.

Another report from the ONS showed that input prices climbed 0.5 percent year-on-year in February, in contrast to the 0.4 percent fall in January. On a monthly comparison, input prices rose at a faster pace of 0.8 percent, following a 0.3 percent in January.

Meanwhile, output price inflation eased to 1.7 percent from 2.5 percent in January. Month-on-month, output prices slid 0.5 after remaining flat in January.

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