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Inflation rises to 3%: "The law of unintended consequences strikes again"

ended 19. February 2025

The Consumer Prices Index (CPI) rose by 3.0% in the 12 months to January 2025, up from 2.5% in the 12 months to December 2024, according to official data published this morning. On a monthly basis, CPI fell by 0.1% in January 2025, compared with a 0.6% fall in January 2024. Newspage asked financial services experts for their views, below.

8 responses from the Newspage community

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Scott Gallacher
Director at Rowley Turton
Yet more bad news for Rachel Reeves. Today’s inflation figures, coupled with virtually non-existent growth, paint a bleak picture. And it’s only likely to get worse. Reeves’ National Insurance hikes are just weeks away, Trump’s tariffs are looming and the Bank of England is stuck in a no-win situation—trying to curb inflation while Reeves supposedly strives for growth. Investors should take note. The UK economy is looking increasingly shaky, and anyone too reliant on UK assets may want to reconsider. At this rate, the last one to leave should turn off the lights.
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Ben Perks
Managing Director at Orchard Financial Advisers
Either get inflation under control or change the metric and target. The 2% target is so outdated and out of touch. Our inflation rate is so susceptible to political and global events and the 2% target created in the late 90s doesn’t reflect this. A 1% sway from 2% puts the economy a step back and kills all hope of a base rate cut next month.
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Riz Malik
Independent Financial Adviser at R3 Wealth
Even with the rise in inflation in this print, don’t expect to see any substantial cuts in interest rate from the Bank of England anytime soon. Unfortunately for the British public it is still amateur hour at 11 Downing Street.
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Justin Moy
Managing Director at EHF Mortgages
This just shows that January's inflation figure was a mere blip, and that the UK economy is wobbling on a knife edge, close to falling miserably. Higher fuel costs and education fee hikes all stem from the mismanagement from the government, and ultimately the cost will be passed onto beleaguered borrowers yet again.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
The swift increase in inflation was as expected as sunshine in Sahara and sadly won’t be the last. April will bring a shower of increasing costs to businesses that will largely be passed onto consumers. The inflation rise will give lenders and the Bank of England more reason for caution with regards to easing rates so there won’t be any mortgage fire-sale on the horizon.
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Michelle Lawson
Director at Lawson Financial
A non shock shock delivered today. Labour’s desimation of the economy is not good news at all. Tax and NI rises have to be passed on and,unsurprisingly,this is via the consumer. This can’t continue and be let to rage again. Businesses and the public need money back in their pockets not the Government haemorrhaging it.
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Elliott Culley
Director at Switch Mortgage Finance
A higher than projected rise in inflation shows how precarious the UKs position currently is. Inflation was expected to rise in the aftermath of the budget and this is the first signs of this filtering through. Another volatile year of ups and downs when it comes to mortgage rates is expected.
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Premium
David Belle
Founder and Trader at Fink Money
The law of unintended consequences strikes again. Labour's VAT increase on private schools has led to an uptick of inflation. It seems like this party has zero understanding of second or third order effects of anything they do, but they seemingly don't care either. It is no wonder we have a Chancellor who has very little experience in policy, a Treasury Secretary in Darren Jones who doesn't see the need to spend £115 a year on Bloomberg to be able to get the best news articles and a business secretary whose only private sector experience is 9 months as a trainee solicitor. An absolutely dire state of affairs and standards are so unbelievably low. What will be interesting is now inflation is approaching the upper bound of the BoE's target, Bailey will have to write to Reeves to explain why it is there... and yet it is largely all Reeves' fault.