Inflation Eases to 3% as Electricity Costs Climb Sharply
Inflation in the United Kingdom has fallen to 3% in January 2026, marking its lowest level since March 2025 and sparking optimism for potential interest rate reductions in the spring. This decline is driven by reductions in petrol prices, a significant cooling of air fares, and a slowdown in food inflation to a nine-month low. However, electricity bills are moving in the opposite direction, presenting a contrasting challenge for households.
Electricity Prices Rise Amid Ofgem Cap Adjustments
According to the Office for National Statistics, electricity prices increased by 5.3% over the 12 months leading to January 2026, up from a 2.7% annual rise in December. On a monthly basis, electricity prices surged by 3.7%, compared to a 1.2% increase during the same period the previous year. This uptick follows a January adjustment to the Office of Gas and Electricity Markets energy price cap, which now sets the annual bill for an average household using direct debit for dual fuel at £1,758, a modest rise of £3.
While headline inflation shows signs of easing, the £1,758 benchmark remains a critical reference point for many households on variable tariffs. In contrast, the cheapest fixed energy deal currently available is approximately £1,482, based on Ofgem data, resulting in a potential annual overpayment of £276 for those not switching providers.
Low Switching Rates Despite Potential Savings
Research from YouGov indicates that 83% of Britons have not switched their energy supplier in the past 12 months, despite the significant savings available. This reluctance is often attributed to the complexity and time-consuming nature of the switching process. Greg Marsh, CEO of Nous, an AI-powered household finance tool, commented on this issue, stating that millions are paying more than necessary due to these barriers.
"The majority of households pay too much for their energy. Not because we’re careless, but because keeping track of everything is exhausting and time-consuming," Marsh explained. To address this, Nous has developed an AI energy switching tool that analyzes current tariffs, compares providers, and manages the switch in minutes, potentially saving households hundreds of pounds annually.
AI Tools Offer Solutions for Energy Savings
Nous's AI-powered platform calculates how much a household is overpaying, identifies fairer deals based on usage data, and facilitates the switching process with minimal effort. This model aims to empower consumers as electricity inflation accelerates, even as broader cost-of-living pressures begin to improve. For households remaining on variable tariffs under the £1,758 cap, the gap between this figure and cheaper fixed deals is expected to remain a focal point in the coming months, with automated tools like Nous positioning themselves as key solutions.
Additional Offers: Parkdean Resorts and Vodafone Business
In related consumer news, Parkdean Resorts, a holiday park operator, has introduced a limited-time offer reducing the cost of a seven-night UK break to just £169 for families. This price applies to selected dates in February and March and includes a two-bedroom caravan stay at Carmarthen Bay in South Wales, with savings achieved through an exclusive £20 discount code. Shorter breaks are also available under this promotion.
Meanwhile, Vodafone Business has launched a time-limited broadband offer for small businesses, providing twelve months at half price on selected fibre packages until March 4. This deal targets firms with one to nine employees, including home offices and startups, with entry-level packages starting at £11.50 per month for the first year, excluding VAT. Vodafone Business emphasizes transparent future price rises to aid in budgeting over the contract term.
