Scottish economic bulletin: March 2025

Inflation

Inflation rose to 3.0% in January with an increase in both goods and services inflation.

• The annual consumer price inflation rate rose to 3.0% in January from 2.5% in December. The increase was mainly driven by transport prices which rose by 1.7% (up from -0.6% in December) while food and non-alcoholic beverages prices also increased by 3.3% annually (up from 2.0% in December).^[2]
• There continues to be a notable difference in goods and services price inflation with services remaining more elevated and rose back to 5.0% in January while goods price inflation rose to 1.0%. Core inflation (excludes energy, food, alcohol and tobacco) rose to 3.7% (from 3.2%).

• Looking ahead, the outlook for inflation remains uncertain. The Bank of England (BoE) forecast inflation to rise to 3.7% in the second half of 2025, partly due to higher energy prices and increases in regulated prices such as water.
• Despite the upward trend in inflation, the Bank’s Monetary Policy Committee reduced the Bank Rate from 4.75% to 4.50% in February, its lowest rate since May 2023. The MPC judged that there had been sufficient progress in disinflation in domestic prices and wages and the forecasted increase in inflation in the short term was not expected to add to underlying domestic inflationary pressures.^[3]