What's happened
UK's CPI inflation rose to 3.4% in December from 3.2% in November, driven by higher tobacco, airfares, and food prices. Experts see this as a temporary blip, with inflation expected to decline in 2026. The Bank of England is likely to hold interest rates steady in February.
What's behind the headline?
The recent rise in UK inflation signals a short-term deviation rather than a sustained surge. The increase was largely driven by volatile categories like airfares and tobacco, which are seasonal or policy-driven. The Bank of England's cautious stance indicates it will likely maintain interest rates at 3.75% in February, awaiting clearer signs of inflation easing. The broader economic context, including slowing wage growth and a weakening jobs market, supports a forecast of inflation returning toward the 2% target later this year. This temporary uptick should not distract from the overall trajectory of disinflation, as recent fiscal measures and energy price reductions are expected to exert downward pressure in the coming months.
What the papers say
The Independent, The Guardian, Reuters, and additional expert commentary collectively suggest that December's inflation rise is a short-term anomaly. The Guardian emphasizes seasonal factors like airfares and duty hikes, while Reuters highlights the likelihood of interest rate stability. The Independent notes that inflation has been on a downward trend since September, with experts forecasting a return to lower levels in 2026. The divergence in forecasts reflects differing interpretations of the volatility in categories like travel and food, but all agree that the overall trend remains downward.
How we got here
Inflation in the UK had been static or falling since last summer, with a sharp decline in November following easing food prices. December's rise was influenced by increased costs in alcohol, tobacco, transport, and food, partly due to seasonal demand and duty hikes. The data suggests a temporary fluctuation amid a broader downward trend since September 2025.
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The Office for National Statistics is the executive office of the UK Statistics Authority, a non-ministerial department which reports directly to the UK Parliament.
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The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based.