The UK’s rate of inflation has increased in a hit for households – we reveal what it means for your money.
The Office for National Statistics (ONS) said the Consumer Price Index (CPI) measured 3% in the 12 months to January.
The Office for National Statistics has published the latest inflation figures[/caption]
This was up 0.5 percentage points from December, when inflation sat at 2.5% and is the highest level in ten months.
The Bank of England has been attempting to bring inflation back to its target of 2%.
UK inflation peaked at 11.1% in October 2022, which was the highest rate in 40 years.
The news will come as a blow to millions of households who will see their broadband and mobile bills rise as a result.
Why does inflation matter?
INFLATION is a measure of the cost of living. It looks at how much the price of goods, such as food or televisions, and services, such as haircuts or train tickets, has changed over time.
Usually people measure inflation by comparing the cost of things today with how much they cost a year ago. The average increase in prices is known as the inflation rate.
The government sets an inflation target of 2%.
If inflation is too high or it moves around a lot, the Bank of England says it is hard for businesses to set the right prices and for people to plan their spending.
High inflation rates also means people are having to spend more, while savings are likely to be eroded as the cost of goods is more than the interest we’re earning.
Low inflation, on the other hand, means lower prices and a greater likelihood of interest rates on savings beating the inflation rate.
But if inflation is too low some people may put off spending because they expect prices to fall. And if everybody reduced their spending then companies could fail and people might lose their jobs.
See our UK inflation guide and our Is low inflation good? guide for more information.
