UK inflation rose to 3% in the 12 months to January 2025, the highest level in 10 months.
On a monthly basis, inflation fell by 0.1% in January 2025, compared with a 0.6% drop in January 2024.
Meanwhile, the CPIH rose to 3.9% in the 12 months to January 2025, up from 3.5% in December 2024.
According to the ONS data, the largest upward contribution to the monthly change in both CPIH and CPI annual rates came from transport, food, and non-alcoholic beverages, while the largest downward contribution came from housing and household services.
Industry professionals lent their perspective on the today’s (19th February) price inflation.
Ben Thompson, deputy CEO at Mortgage Advice Bureau, said: “Inflation increasing is never great for borrowers.
“However, the good news is mortgage pricing has been on a downward trend since the Bank of England’s decision to cut interest rates earlier this month.
“This means the rates available now are likely to be considerably lower for those who took out two-year fixes during the 2023 peak.”
Tim Parkes, CEO at RAW Capital Partners, added: “Following January’s unexpected fall in inflation, many investors will have hoped for a dose of déjà vu this morning – it would have provided more ammunition for the Bank of England to cut the base rate again in March.
“While this hasn’t materialised, a slight uptick in inflation is no reason to panic.
“The Bank of England had itself forecast this rise, so today's data is not going to derail plans for further base rate reductions; we are still expecting rates to come down steadily across the year.
“It’s important to remember that the market has had a strong start to the year.
“House prices have risen according to all of the major indices, while buyer and investor demand is red hot amid falling rates and ahead of April’s Stamp Duty changes.
“There’s no reason for these trends to reverse in response to today’s increase, particularly if lenders can provide the adaptability and support that brokers and borrowers will be looking for.
“As ever, the property market is bubbling away with both challenges and opportunities, so the onus remains on lenders and brokers to support borrowers as best they can, helping them to navigate an evolving yet competitive market.”
Paul Noble, CEO at Chetwood Bank, commented: “For Britons, this is a troubling setback, with households once again facing rising costs just as they were starting to stabilise.
“With that rate of inflation forecast to rise further before easing, uncertainty remains high.
“If inflation remains stubborn, further [rate] cuts could be delayed, prolonging financial strain for borrowers and businesses.
“However, keeping rates higher for too long risks deepening economic stagnation in stark contrast to the stable growth many are seeking.”
Mark Eaton, chief operating officer at April Mortgages, stated: “A resurgence in inflation is a reminder that the Bank of England is walking a tightrope when it comes to managing interest rates.
“There has been talk of further rate cuts this year, but those predictions feel premature with prices now rising more quickly.
“For borrowers, rising living costs will put further pressure on already stretched incomes and compound the affordability challenge impacting buyers across the country, particularly those trying to get a foot on the ladder.
“Access to larger loan amounts via modern 10-year fixed-rate products won’t fix the problem, but they could help borrowers overcome these hurdles.
“The mortgage market is in for a bumpy ride this year and borrowers should seek professional advice to help overcome affordability constraints and protect against ongoing rate volatility.”
Ryan Etchells, chief commercial officer at Together, said: “The ONS announcement […] could deal a minor blow to the mortgage market in the short term, but it is not unexpected.
“In fact, we may see further increases, because of inflationary factors including higher energy costs and wage growth, as well as the potential impact of US president Donald Trump’s tariffs on the UK economy.
“However, the fact that the Bank of England cut its base rate by 0.25% earlier this month suggests that its members were not overly concerned about a steady rise in inflation, although they will be keen that it is brought nearer its 2% target this year.
“This latest rate reduction has allowed mortgage lenders, including Together, to reduce their own rates – passing on savings in borrowing costs to home buyers and people remortgaging.
“Looking longer term, stubborn inflation, if it materialises, may lead to the Bank holding the base rate or cutting more slowly across 2025 than predicted by most economists at the end of last year.
“This is one factor which will affect mortgage lenders’ costs of funds and lenders’ decisions for future rate cuts.”
Daniel Austin, CEO and co-founder of ASK Partners, said: “The prospect of cheaper mortgages now depends on lenders’ responses to evolving inflation trends.
"While lower base rates typically reduce borrowing costs, persistent inflation could keep fixed mortgage rates elevated, limiting immediate benefits.
"Nonetheless, a more stable rate environment could enhance buyer confidence, especially for those seeking certainty before making long-term financial commitments.
“For investors and developers, today’s inflation data underscores the delicate balance the Bank of England must maintain between supporting growth and ensuring price stability.
"Although demand remains strong in sectors like co-living and BTR, financing conditions will depend on how inflationary pressures evolve.
"If rates continue to trend downward towards 3.5% by year-end, this could revive transaction volumes and investment flows.
"However, ongoing inflation risks necessitate careful financial planning as market participants navigate this uncertain landscape.”
