The rate at which prices are increasing has fallen significantly, official figures have shown, making an interest rate cut next month even more likely.<\/p>\n
Data from the Office for National Statistics says the consumer price index (CPI) measure of inflation dropped to 3% in the year to January.<\/p>\n
Not since March last year has inflation been this low.<\/p>\n
Money blog: Big drop in inflation announced – follow live<\/a><\/p>\n It means things are still becoming more expensive, just at a slower pace than before.<\/p>\n But it also increases the odds of an interest rate cut in March.<\/p>\n Now, traders think there’s an 81% chance of a drop to 3.5% next month.<\/p>\n A second cut, bringing interest rates to 3.25%, is anticipated in September.<\/p>\n The pace at which prices are rising is closely watched by the interest-rate setters at the Bank of England.<\/p>\n Even before today’s inflation data release, traders were betting on a cut after jobs data<\/a> on Tuesday showed employment was at a near five-year high and wasge increases were falling.<\/p>\n The Bank adjusts the interest rate based on how close the UK is to its 2% inflation target.<\/p>\n That base interest rate affects how much you get for your savings, how high your mortgage rate is, and how expensive it is to pay back some student loans.<\/p>\n When will the next interest rate cut be?<\/p>\n Not everyone thinks a March rate cut is a given.<\/p>\n Big Four accounting company PWC said it’s “not guaranteed”.<\/p>\n A spring interest rate cut is seen as a given according to the Institute of Chartered Accountants in England and Wales (ICAEW) though “a lingering question” is whether to go in March or April.<\/p>\n How many cuts?<\/p>\n And the idea of a second cut at all is “far from certain” due to stubbornly high inflation in the biggest part of the UK economy, according to economic research firm Pantheon Macroeconomics.<\/p>\n While services inflation slowed to 4.4%, it was less of a slowdown than the Bank and economists polled by Reuters had forecast.<\/p>\n A third interest rate cut, however, is being considered by tax consultants RSM, though that would only happen if the jobs market worsens.<\/p>\n “A third rate cut is a downside risk rather than the base case at the moment”, said RSM’s chief economist Thomas Pugh.<\/p>\n <\/p>\n <\/a><\/p>\n This breaking news story is being updated and more details will be published shortly.<\/p>\n Please refresh the page for the latest version.<\/p>\n You can receive breaking news alerts on a smartphone or tablet via the Sky News app<\/a>. You can also follow us on WhatsApp<\/a> and subscribe to our YouTube channel<\/a> to keep up with the latest news.<\/p>\n","protected":false},"excerpt":{"rendered":"The rate at which prices are increasing has fallen significantly, official figures have shown, making an interest rate…\n","protected":false},"author":2,"featured_media":431993,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,1294,56,54,55],"class_list":{"0":"post-431992","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-uk","11":"tag-united-kingdom","12":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/431992","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=431992"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/431992\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/431993"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=431992"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=431992"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=431992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}