UK inflation fell to its lowest level since March 2025, according to the Office for National Statistics, strengthening expectations for an interest rate cut at the Bank of England's next meeting. The data comes as economists warn of weakening economic conditions.

Jefferies economist Modupe Adegbembo, speaking on Bloomberg Television, predicts 75 basis points of rate reductions in 2026. She cited two primary factors: weaker-than-expected growth and deteriorating labor market conditions. "We think growth is weaker than expected," Adegbembo said, adding that "the labor market conditions are not doing well right now."

The inflation drop provides ammunition for policymakers considering monetary easing. Lower inflation typically gives central banks more flexibility to reduce borrowing costs without stoking price pressures. The Bank of England has maintained higher rates longer than some peers as it balanced inflation concerns against economic slowdown risks.