UK Inflation Jumps on Food Price Surge, But Underlying Trends Soften

The UK's Consumer Prices Index (CPI) jumped to 3.9% in February 2025, driven by sharp increases in food prices and smaller falls in energy costs compared to a year ago.

However, this headline figure masks the underlying trend of continued softening in core inflation, which excludes energy, food, alcohol, and tobacco, easing to 4.1% from 4.4%, and services inflation moderating to 4.9% from 5.2%.

The rise in CPI was largely due to base effects, with energy prices falling less than a year ago and food prices rising faster.

This divergence is crucial for policymakers, as it suggests that the temporary factors behind the headline spike are likely to fade, while underlying domestic pressures ease.