London

Inflation in the United Kingdom ticked up in December, marking its first rise in five months and remaining above the Bank of England’s target, official data released on Wednesday showed.

Figures from the Office for National Statistics indicated that the consumer prices index increased at an annual rate of 3.4 per cent in December, compared to 3.2 per cent in November. The rise was driven in part by higher taxes on tobacco products and increased costs of overseas travel during the Christmas holiday period.

The increase came in marginally below market expectations, as most economists had forecast inflation to climb to around 3.5 per cent. Analysts believe the December uptick is temporary and does not alter the broader trend of easing price pressures.

James Smith, research director at the Resolution Foundation, said inflation is expected to fall sharply next year, adding that significant declines in 2026 should bring price growth closer to long-term norms.

With inflation showing signs of moderation, economists anticipate that the Bank of England may continue reducing its key interest rate, which currently stands at 3.75 per cent.

The Labour government, which returned to power with a decisive mandate 18 months ago, is banking on falling inflation and lower borrowing costs to stimulate economic growth. However, progress has been slower than hoped, contributing to a sharp drop in its approval ratings.

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Responding to the latest data, Chancellor of the Exchequer Rachel Reeves said she was confident that 2026 would mark a turning point for Britain’s economy.