BUSINESS LIVE: Inflation hits 3%; HSBC to slash costs; BAE Systems profits soar

Published on: February 19, 2025

By LIVE COMMENTARY

Updated: 07:40 GMT, 19 February 2025

UK inflation accelerated faster than expected in January on the back of higher transport and education costs, with fresh data further complicating the path for Bank of England interest rate cuts.

The consumer price index jumped to 3 per cent last month, up from 2.5 per cent in December and ahead of forecasts of 2.8 per cent, according to the Office for National Statistics.

The FTSE 100 will open at 8am. Among the companies with reports and trading updates today are HSBC, BAE Systems and Jet2. Read the Wednesday 19 February Business Live blog below.

> If you are using our app or a third-party site click here to read Business Live

Inflation at 3% ‘vindicates the Bank of England’s slow and steady approach to rate cutting’

Michael Field, chief equity strategist at Morningstar:

‘After a lower than expected reading in December, UK inflation rose to unexpected highs of 3 per cent.

‘Markets had expected a 30 basis point rise, but today’s number brings us back to levels not seen in almost a year. This may give the Bank of England pause for thought on future interest rate cuts, with the current level far in excess of its 2 per cent targeted level.

‘Core inflation, the measure that strips out volatile components such as food and energy, saw an equally large rise, increasing to 3.7 from 3.2 per per cent last month, moving even further away from that magic 2 per cent target.

‘Falling interest rates are obviously a boon to equities, and any slowdown in the pace of cuts will frustrate investors. But ultimately today’s reading vindicates the Bank of England’s slow and steady approach to rate cutting.’

Inflation jumps to 3%

UK inflation accelerated faster than expected in January on the back of higher transport and education costs, with fresh data further complicating the path for Bank of England interest rate cuts.

The consumer price index jumped to 3 per cent last month, up from 2.5 per cent in December and ahead of forecasts of 2.8 per cent, according to the Office for National Statistics.