UK Inflation Rebounds in December
The United Kingdom’s consumer price index (CPI) inflation rose to 3.4 per cent in December 2025, up from 3.2 per cent in November, marking the first increase in several months. The figure was slightly above market expectations and reflected increases in prices for items such as air fares, tobacco and food.
Drivers of the Increase
Higher costs for tobacco products, travel and some food categories contributed to the uptick in inflation. Economists say much of the rise is temporary and driven by volatile components, not underlying demand pressures.
Impact on Monetary Policy
The slight rebound in inflation could influence expectations about future interest rate decisions by the Bank of England. Despite the rise, inflation remains above the Bank’s 2 per cent target, and the central bank and markets continue to forecast that prices will gradually come down over the course of 2026.
Broader Economic Picture
While inflation edged up at the end of 2025, analysts expect the overall trend to ease as temporary price pressures fade and broader economic conditions evolve. The rebound does not signal a sustained shift away from the longer-term downward inflation path projected for the UK.
