On a monthly basis, CPI fell by 0.5% in January 2026, compared with a fall of 0.1% in January 2025.

Meanwhile CPIH rose by 3.2% in the 12 months to January 2026, down from 3.6% in the 12 months to December 2025.

On a monthly basis, CPIH fell by 0.3% in January 2026, while it was little changed in January 2025.

Transport, food and non-alcoholic beverages made the largest downward contributions to the monthly change in both CPIH and CPI annual rates.

Jonathan Samuels, CEO at Octane Capital, commented: “Today’s inflation data shows a welcome step back in price pressures, with headline CPI easing to around 3% in January. This suggests that the temporary uptick seen at the end of 2025 has likely subsided and that disinflation continues to move in the right direction.

“Of course, with inflation not yet at target and underlying pressures still evident, a measured approach from the Bank of England remains essential. While markets may be pricing in cuts, it would be wise to maintain flexibility until the path back to sustained 2% inflation is clear.”

Roger Morris, group distribution director at Chetwood Bank for ModaMortgages and CHL Mortgages, said: “With the usual two-month lag, these ONS figures reflect December’s market, which was dealing with the aftermath of the Autumn Budget and the seasonal slowdown ahead of Christmas. In that environment, a modest monthly dip is not surprising, particularly with annual growth still remaining in positive territory.

“December captured a period of continued hesitation. While expectations were building around the rate cut that was indeed delivered just before Christmas — and the potential for further easing in the new year — many buyers and investors were still weighing affordability and policy shifts before committing.

“And this has carried on into the new year, although there is certainly a more positive sentiment across the property market than there was this time last year, with conditions generally becoming more favourable for buyers.

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“With markets increasingly pricing in further easing through 2026 and a base rate closer to 3% by year-end, the foundations are in place for this confidence to strengthen as the year progresses.”

Paresh Raja, CEO at Market Financial Solutions, said: “Buyer enquiries and sales instructions seem to have picked up across the first seven weeks of the year, suggesting confidence is returning. 

“Future base rate cuts will help boost this confidence further, but there is also a more pragmatic view being taken, with many brokers and buyers not wanting to waste time in getting a deal done.

“The coming months will be telling, and this morning’s CPI data was encouraging. Confidence and enquires will need to convert into more transactions, and this will help inject a little more life back in the UK property market this year.”

Chris Storey, CCO at Atom bank, added: “This morning’s inflation data has poured fuel on a housing market that was already shifting into top gear. With inflation falling to 3%, the starting gun has officially been fired for a potential spring mortgage price war.

“Speed has rarely been more important. Not only has the ONS reported a rise in house prices today, but we’re seeing the average price tag push through the £300,000 barrier for the first time, according to Halifax. We face the prospect of buyers racing to lock in deals before further price growth erodes the benefits of the now widely expected base rate cut next month.”

Kris Brewster, director of retail banking at LHV Bank, commented: “Since 2021, the Bank of England has badly let down UK consumers, failing to keep inflation in check. But could this be about to change with today’s drop?

"Despite January’s Bank of England review citing volatility and poor oversight for years of forecasting mistakes, the conclusion is clear — the Bank keeps getting inflation wrong. And it’s the UK consumer who pays, with mortgage borrowers suffering a cost of living crisis while savers have watched returns on their cash fade with every cut to the base rate.

"Today’s news makes the case for a March base rate cut clearer, and with signs of confidence in the mortgage and housing markets we expect to see mortgage lenders price more keenly as the fight for customers heats up.”