- January 23, 2026
- Posted by: wp_update-1695559536
- Category: News
UK financial news today is dominated by an unexpected rise in retail sales in December, slightly improving sentiment about the UK economy even as inflation remains above target and markets watch interest-rate prospects and stock index gains.
Retail sales and consumers
• UK retail sales volumes rose by 0.4% in December compared with November, beating economists’ expectations of flat or slightly weaker activity and reversing earlier monthly declines.
• Over the final quarter of 2025, sales were still down about 0.3%, showing that underlying demand remains soft despite the Christmas boost.
• Consumer confidence in January has edged up to its highest level since mid 2024, although households remain worried about the broader economic outlook.
Inflation and interest rates
• UK inflation recently ticked up to about 3.4%, remaining above the Bank of England’s 2% target after having fallen sharply from peaks above 10% in previous years.
• The Bank of England cut its policy rate to 3.75% in December 2025 and signals a gradual downward path, but markets now debate how quickly further cuts can proceed given the latest upside surprise in inflation.
Stock market and FTSE 100
• The UK’s main stock benchmark (often tracked via the GB100/FTSE 100) is trading around 10,150–10,170, up roughly 0.2% on the day and more than 19% higher than a year ago.
• Recent sessions have seen modest gains after a sharp drop earlier this week linked to global risk aversion, including U.S. tariff threats towards Europe that weighed on London-listed shares.
Outlook for 2026
• Forecasters expect UK inflation to drift closer to the 2% target by mid 2026, helped by lower energy bills and earlier tax and duty effects fading, though average inflation for 2026 is still projected around the high 2% range.
• With growth sluggish but prices easing, many analysts anticipate only limited additional rate cuts this year, leaving monetary policy supportive but not aggressively stimulative
