CPI inflation falls to 3.0%

CPI inflation falls to 3.0%

18 Feb 2026

Adam Gillespie, Partner, XPS Group, commented: "For defined benefit schemes, the direct immediate impact is limited. Most remain well insulated from inflation movements, with aggregate surpluses of around £220 billion. However, a meaningful fall in inflation alters the future protection offered by LDI strategies. Without recalibration, schemes risk their inflation hedge slipping - leaving them exposed if price pressures resurface. In a lower‑return environment, keeping inflation and interest rate risks firmly under control is essential, making today’s data another cue for trustees and sponsors to revisit their hedging strategies.

For defined contribution, the focus is shifting from inflation to adequacy. Despite price pressures easing, many savers remain behind the curve. Without higher contributions or stronger long‑term returns, the value of DC pots will keep eroding. Keeping pace now means boosting contributions where possible and ensuring growth assets deliver over time."