A sharp drop in British inflation to its lowest level in ten months has drawn a direct challenge from one of the world’s largest independent financial advisory firms, with deVere Group warning that the Bank of England now has no credible justification to delay a rate cut at its March meeting.
UK consumer inflation fell to 3.0 percent in January 2026, down from 3.4 percent in December, its lowest reading since March last year, according to data from the Office for National Statistics (ONS). Core inflation, which strips out volatile energy, food, and alcohol prices, also eased, edging down to 3.1 percent from 3.2 percent in December.
James Green, Investment Director at deVere Group, said the figures remove any remaining grounds for hesitation at the Monetary Policy Committee (MPC). “This is meaningful disinflation across both headline and underlying components. The data now give the Bank of England real latitude to act, and no credible reason to delay,” he said.
The ONS data confirmed that falling petrol, food, and airfare costs drove much of the January decline, with average petrol prices dropping 3.1 pence per litre between December and January. Food and non-alcoholic drink inflation also eased to 3.6 percent from 4.5 percent in the prior month. Offsetting some of those gains, hotel and restaurant costs continued to rise.
The disinflation data arrives alongside a deteriorating labour market. UK unemployment climbed to 5.2 percent in December, its highest level in five years, while youth joblessness reached a decade high. Green argued that taken together, softer prices and rising slack in the labour market make the case for easing overwhelming. “January’s inflation report, combined with weakening employment and wage dynamics, gives the MPC the facts it needs to cut when it next meets,” he said.
Futures markets are now pricing in an 84.3 percent probability of a March rate cut, with the MPC scheduled to announce its next decision on Thursday, March 19, 2026. The Bank of England projects consumer price inflation to fall to 2.0 percent in June 2026 and remain near target thereafter.
Green pressed the case for urgency, warning that holding rates at their current level of 3.75 percent risks inflicting unnecessary damage on an already sluggish economy. “Monetary policy operates with a lag. The cumulative impact of past tightening is already discouraging demand. Holding rates too high now risks choking growth just as price pressures loosen,” he said.
Should the MPC act, Green said the benefits would ripple quickly across multiple sectors. Mortgage affordability would improve, supporting housing transactions and new construction activity. Banks with diversified lending books would see financing demand recover as household and small business credit becomes more accessible. Retailers, leisure operators, and travel firms would also benefit as easing cost-of-living pressures free up discretionary spending. In equity markets, lower discount rates would support valuations in technology, infrastructure, and other growth-oriented sectors.
Economists at ING maintained their expectation of cuts in both March and June, which would bring the base rate down to 3.25 percent, while analysts at Jefferies projected as much as 75 basis points of total reductions across 2026.
Green concluded with a direct message to investors. “If the Bank of England wants to maintain credibility with markets and businesses, it must act in March. Investors should begin positioning now. Waiting until the decision day means being too late.”
