UK inflation rate rises to 3.4% in December marking first increase since July 2025
UK inflation has risen to 3.4 percent in the year to December, ONS figures have revealed.
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The figure, up from 3.2 percent in November, marks the first increase since July 2025.
The rise is said to be fuelled by Christmas getaways - following a fuel price rise at the tail end of last year, economists have said.
Some economists are expecting the rate of Consumer Prices Index (CPI) inflation to have risen in December after falling sharply the previous month.
However, December’s rate rise comes in slightly below the 3.5% that a consensus of economists had been forecasting for the month.
ONS chief economist Grant Fitzner said: “Inflation ticked up a little in December, driven partly by higher tobacco prices, following recently introduced excise duty increases.
"Air fares also contributed to the increase with prices rising more than a year ago, likely because of the timing of return flights over the Christmas and new year period."
“Rising food costs, particularly for bread and cereals, were also an upward driver," he continued.
“These were partially offset by a fall in rents inflation and lower prices for a range of recreational and cultural purchases.”
It comes as the Chancellor, Rachel Reeves, responded to the figures, saying: “My number one focus is to cut the cost of living.
"At the budget I announced £150 off energy bills, a freeze to rail fares for the first time in 30 years, a freeze to prescription charges for the second year running, and an increase to the national minimum and living wage.
"Money off bills and into the pockets of working people is my choice. There’s more to do, but this is the year that Britain turns a corner."
A consensus of economists have predicted that it will jump higher to 3.5% for last month, from 3.2% in November.
Rob Wood and Elliott Jordan-Doak, economists for Pantheon Macroeconomics, said they were forecasting a shallower rise in CPI to 3.3% in December.
A hike to tobacco duties, which was announced at the autumn budget in November, is set to have pushed up overall inflation during the month.
The price of plane tickets and hotels are also expected to have soared amid stronger demand for Christmas travel.
Analysts forecast that airfares could have jumped by about 30% between November and December.
But economists stressed that the choice of date for the Office for National Statistics (ONS) to collect the latest inflation data would be crucial, as prices would have differed throughout the month.
If it was collected later in the month, travel prices could have been much higher in line with the school holidays, pushing up the overall rate of inflation.
Andrew Goodwin, chief UK economist for Oxford Economics, said he thought the slowdown in the rising cost of living was “temporarily halted” in December.
He said: “Some of November’s downward pressure came from volatile categories, including clothing, airfares, and accommodation services, and this is likely to have unwound in December, although the choice of date for collecting the data will likely have a crucial bearing on the outturn for airfares.”
He is predicting a much sharper increase of CPI inflation to 3.6% in December.
On the other hand, analysts for Barclays said they thought inflation would remain unchanged at 3.2% in December.