The latest official figures show that UK consumer price inflation slowed to its lowest rate in nearly a year in January 2026, as the pace of food price inflation eased significantly from the end of 2025.

Data from the Office for National Statistics (ONS) indicates that headline inflation stood at 3.0 per cent on the Consumer Prices Index (CPI) measure, down from 3.4 per cent in December 2025.

This marked a notable decline in the annual rate of price growth for food and non-alcoholic beverages, as well as broader price pressures in the economy.

Falling food inflation and softer prices for households

ONS data shows that food and non-alcoholic beverage prices rose by 3.6 per cent in the 12 months to January 2026, a marked slowdown from 4.5 per cent in December 2025.

Monthly price movements also pointed to a slight decrease in food costs in January. The moderation in food inflation was a key factor in the overall reduction in the consumer price inflation rate, with transport and energy costs also contributing to the downward shift.

Slower food price inflation offers some relief for households and businesses, after a period of elevated cost pressures linked to rising labour and energy costs.

While food prices remain above pre-pandemic levels, the recent deceleration aligns with broader trends of easing price growth across key consumer categories in the UK economy.

Retail price trends and shop price inflation

Industry data from the British Retail Consortium (BRC) and partners showed mixed signals in shop price inflation during the period.

Some measures indicated that shop price inflation climbed in the early part of January, reflecting higher business costs feeding through to retail prices, especially in fresh food categories.

However, the deceleration in headline food price inflation reported by ONS data suggests that the overall trend in retail price growth may be moderating.

These retail price trends are important for global supply chain and procurement teams, as they affect cost forecasting and inventory planning across food categories and grocery segments.

Implications for monetary policy and cost of living

The slower pace of consumer price inflation in January has implications for the Bank of England’s (BoE) interest rate strategy and cost-of-living pressures in the UK.

With headline CPI inflation closer to the BoE’s 2 per cent target than at any point in the past year, market expectations for an interest rate adjustment have shifted.

Analysts have noted that easing inflation strengthens the case for a potential rate cut in the spring, although policymakers remain attentive to persistent price growth in services and core inflation components.

For international retail sector readers, understanding the interplay between food price inflation, consumer spending, and monetary policy in the UK is essential.

These trends influence sourcing costs, pricing strategies and demand forecasts, particularly in markets where UK imports and consumer confidence are key drivers.