UK Inflation Rises to 3.4% in December 2025

UK inflation rose unexpectedly to 3.4 percent in the year to December 2025, up from 3.2 percent the previous month, according to data released by the Office for National Statistics on Wednesday. The increase, which exceeded economists' median forecast of 3.3 percent, was driven primarily by higher air fares, tobacco prices and transport costs, leaving the rate well above the Bank of England's 2 percent target.

The Consumer Prices Index, the main measure of inflation, reflected upward pressure from seasonal factors around the Christmas and New Year holidays. Air fares rose more sharply than a year earlier, likely due to the timing of return flights during the peak travel period. Tobacco prices also climbed following recent excise duty increases announced in the autumn budget. Food inflation accelerated to 4.5 percent from 4.2 percent, with notable rises in bread and cereals contributing to the trend. Transport costs added further to the overall figure.

These pressures were partly offset by softer rents inflation and declines in prices for recreational and cultural goods. Core CPI, which strips out volatile food and energy prices, held steady at 3.2 percent. Services inflation, a...