Inflation hits highest level in 10 months

Inflation hit 3% in January, its highest level in 10 months, as air fairs, new private school fees and the cost of food and drink all rose more than usual for the time of year, according to the latest figures from the Office for National Statistics (ONS). The 3% level is up from the 2.5% figure recorded in December. One of the main drivers was the overall prices in the transport division, which rose by 1.7% in the year to January 2025, compared with a fall of 0.6% in the year to December 2024. On a monthly basis, prices fell by 0.5% in January 2025, compared with a fall of 2.8% a year ago. Air fares tend to rise into December and fall into January. However, in December 2024 and January 2025, this pattern was less pronounced than in previous years. The monthly rise in December 2024 was the third-lowest December rise since monthly price collection began in 2001. Meanwhile, food and non-alcoholic beverage prices rose by 3.3% in the year to January 2025, up from 2.0% in December 2024. Prices for this division rose by 0.9% in January 2025, up from a monthly fall of 0.4% a year ago. The annual rate of 3.3% in January 2025 compares with 7.0% to January 2024. There were upward contributions to the change in the annual rate of inflation between December 2024 and January 2025 in seven of the 11 food and non-alcoholic beverages classes and came as prices rose this year but either fell or rose at a slower rate between the same two months last year. The other main driver was the annual inflation rate for education at 7.5% in the year to January 2025, up from 5.0% in December 2024. On a monthly basis, prices rose by 2.4% in January 2025, but did not change a year ago. The only item that changed prices in the education division was private school fees, where prices rose by 12.7% on the month but did not change a year ago. ONS chief economist Grant Fitzner said: “Inflation increased sharply this month to its highest annual rate since March last year. The rise was driven by air fares not falling as much as we usually see at this time of year, partly impacted by the timing of flights over Christmas and New Year. “This was the weakest January dip since 2020. After falling this time last year, the cost of food and non-alcoholic drinks increased, particularly meat, bread and cereals. Private school fees were another factor, as new VAT rules meant prices rose nearly 13% this month.”