In January, the UK annual inflation rate rose to 3.0%, surpassing market expectations of 2.8% and up from 2.5% in December. The increase was driven by higher private school fees, following the introduction of a new sales tax, along with rising transport and food costs. Higher inflation makes a March interest rate cut by the Bank of England improbable, with figures confirming a rebound as rising air fares and the introduction of VAT on private school fees widened the gap with the Bank’s 2% target. Core inflation, excluding volatile items, climbed to 3.7% from 3.2%, adding complexity to the Bank’s monetary policy outlook and potentially delaying rate cuts.