Inflation has risen a surprising amount to the highest in nearly a year, official figures show.
This means prices are rising even more than at any time since last March, according to data from the Office for National Statistics for January.
The consumer price index (CPI) ticked up steeply to 3% from 2.5% a month earlier.
A lower rise to 2.8% was forecast by economists polled by Reuters and by central bank the Bank of England.
The rise has come from more expensive transport and food and non-alcoholic beverages costs.
Flight prices did not fall as much as usual for this time of year.
Meat, bread and cereals in particular became more expensive while an increase in private school fees were another factor, as new VAT rules meant prices rose nearly 13%.
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What does it mean for interest rates?
Inflation is now higher above the Bank of England‘s 2% target and will make interest rate cuts less likely.
Traders are pricing in an 82% chance of no rate cut at its March meeting. Two more rate cuts are still expected this year.
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Inflation rises steeply to 3%
But there are some signs that could be welcomed by the rate-setters at the Bank.
Coming in below forecast was services inflation, impacted by rising wages, that rose to 5%, rather than the anticipated 5.2%.
The closely watched core inflation measure – which excludes volatile food and energy prices – increased as expected to 3.7%, up from 3.2% in December.
Just the start
More inflation rises are anticipated throughout the year.
Last month the Bank of England predicted it would reach 3.7% by the end of the year.
But economic research firm Pantheon Macro said a 4% reading later this year “is far from out of the question”.
Responding to the figures, Chancellor Rachel Reeves said:
“Since the election we’ve seen year on year wages after inflation growing at their fastest rate – worth an extra £1,000 a year on average – but I know that millions of families are still struggling to make ends meet.
That’s why we’re going further and faster to deliver economic growth.”
TikTok is putting hundreds of jobs at risk in the UK, as it turns to artificial intelligence to assess problematic content.
The video-sharing app said a global restructuring is taking place that means it is “concentrating operations in fewer locations”.
Layoffs are set to affect those working in its trust and safety departments, who focus on content moderation.
Unions have reacted angrily to the move – and claim “it will put TikTok’s millions of British users at risk”.
Figures from the tech giant, obtained by Sky News, suggest more than 85% of the videos removed for violating its community guidelines are now flagged by automated tools.
Meanwhile, it is claimed 99% of problematic content is proactively removed before being reported by users.
Executives also argue that AI systems can help reduce the amount of distressing content that moderation teams are exposed to – with the number of graphic videos viewed by staff falling 60% since this technology was implemented.
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It comes weeks after the Online Safety Act came into force, which means social networks can face huge fines if they fail to stop the spread of harmful material.
The Communication Workers Union has claimed the redundancy announcement “looks likely to be a significant reduction of the platform’s vital moderation teams”.
In a statement, it warned: “Alongside concerns ranging from workplace stress to a lack of clarity over questions such as pay scales and office attendance policy, workers have also raised concerns over the quality of AI in content moderation, believing such ‘alternatives’ to human work to be too vulnerable and ineffective to maintain TikTok user safety.”
John Chadfield, the union’s national officer for tech, said many of its members believe the AI alternatives being used are “hastily developed and immature”.
He also alleged that the layoffs come a week before staff were due to vote on union recognition.
“That TikTok management have announced these cuts just as the company’s workers are about to vote on having their union recognised stinks of union-busting and putting corporate greed over the safety of workers and the public,” he added.
Under the proposed plans, affected employees would see their roles reallocated elsewhere in Europe or handled by third-party providers, with a smaller number of trust and safety roles remaining on British soil.
The tech giant currently employs more than 2,500 people in the UK, and is due to open a new office in central London next year
A TikTok spokesperson said: “We are continuing a reorganisation that we started last year to strengthen our global operating model for Trust and Safety, which includes concentrating our operations in fewer locations globally to ensure that we maximize effectiveness and speed as we evolve this critical function for the company with the benefit of technological advancements.”
The government has stressed it will cover staff wages and the running costs of the plants until a buyer is found.
Image: The Liberty Steel plant in Rotherham
Speaking to Sky’s Anna Jones, Community Union National Secretary Alun Davies said workers are “concerned” about the developments.
He added: “Today is payday – but because the bank accounts were closed, I think the special managers and the HR team now are working with the unions to get that pay in today or as soon as they can.”
With a bank holiday weekend fast approaching, workers may only receive their wages on Tuesday unless payments are made as a matter of urgency.
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Mr Davies said he is confident that the plants have a future, telling Sky News: “If we use British-made steel for British infrastructure projects, it creates jobs, it grows economies and it gets our economy back on track, which is what this Labour government is trying to do.”
While he said government investment is valuable, the union official cautioned: “If we can find a decent buyer – a reputable steel company that knows what they’re doing – we’re open to all options.
“We’re not going to just say nationalise or part-nationalise, it’s what’s best for the business and gets the business up and running as soon as possible … if the government takes ownership, that is a significant cost to the taxpayer.”
Image: Alun Davies
Mr Davies explained that many workers have been staying at home and on 85% pay, which is having a big impact on their mental health and wellbeing.
In a statement, Community’s General Secretary Roy Rickhuss described it as an “extremely worrying time” for the union’s members – and said jobs must be protected in the event of restructuring or a transition to new ownership.
Calling for 12 months of pension contributions to be secured alongside this month’s paychecks, he added: “Steelworkers at Liberty Steel are highly skilled and hugely experienced; they are quite frankly irreplaceable and will be critical to delivering future success for the businesses.”
Mr Rickhuss said the union has received “firm assurances” that efforts to address pay and pensions are under way – and welcomed the government’s intervention.
“However, in taking control of the business the government has assumed responsibility for our livelihoods and our communities, and we will of course be holding them to account,” he added.
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Bosses at Speciality Steels have said the move to wind up the business is “irrational” as a plan had been presented to courts that would have led to new investment in the UK steel sector.
“Instead, liquidation will now impose prolonged uncertainty and significant costs on UK taxpayers for settlements and related expenses, despite the availability of a commercial solution,” chief transformation officer Jeffrey Kabel added.
On Thursday, a government spokesperson said ministers “remain committed to a bright and sustainable future for steelmaking and steelmaking jobs in the UK”.
The US president has nicknamed the Fed chairman “Too Late” Jerome Powell on social media – and has repeatedly called for his resignation.
But Mr Powell has argued that interest rates can only be lowered when there are clear signs that inflation is returning to its 2% target.
Today will mark his final keynote speech at Jackson Hole before his eight-year tenure at the Federal Reserve ends in May 2026.
Past addresses have been known to move the markets, with reaction often amplified because of lower trading volumes during the summer months.
Figures from the CME FedWatch tool show expectations for a US interest rate cut when policymakers next meet in September are on the decline.
One week ago, the probability of a 0.25 percentage point cut was priced in at 85.4%. But that fell to 82.4% on Thursday – and has dropped further to 73.3% at the time of writing.
It comes as other senior officials within the Federal Reserve, speaking on the sidelines of the three-day summit in Jackson Hole, continued to express caution.
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Beth Hammack, president of the Cleveland Fed, told Yahoo Finance: “With the data I have right now and with the information I have, if the meeting was tomorrow, I would not see a case for reducing interest rates.”
Of particular concern is the impact that Donald Trump’s tariffs are having on inflation – both in terms of costs for businesses, and what consumers ultimately pay.
Just this week, Walmart – the world’s biggest retailer – warned tariffs are squeezing its profit margins and leading to higher prices at the till.