In a surprising economic development, UK inflation accelerated last month, rising to 3.4 per cent in December 2025 from 3.2 per cent in November. This unexpected climb breaks a recent trend of stability or decline, as inflation had held at the same rate or fallen for four consecutive readings since July 2025, when it stood at 3.8 per cent.
Key Drivers Behind the Inflation Increase
The Office for National Statistics (ONS) attributed the rise to several factors, with air fares and tobacco prices playing significant roles. Transport costs also contributed to the upward pressure on prices, creating a squeeze for many Britons already feeling the pinch in their household budgets.
Detailed Analysis from the ONS
ONS Chief Economist Grant Fitzner provided further insight into the figures, stating: "Inflation ticked up a little in December, driven partly by higher tobacco prices, following recently introduced excise duty increases. Airfares 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."
He added: "Rising food costs, particularly for bread and cereals, were also an upward driver. These were partially offset by a fall in rents inflation and lower prices for a range of recreational and cultural purchases."
Broader Economic Context
The report also highlighted mixed signals in other economic indicators. The annual increase in prices for goods leaving factories remained unchanged this month, while the increase in the cost of raw materials for businesses slowed, primarily due to lower crude oil prices. This suggests that while consumer-facing inflation has risen, some underlying cost pressures may be easing.
This development comes as a reminder of the ongoing volatility in the UK economy, with everyday groceries and travel expenses continuing to impact household finances. The unexpected rise in inflation may prompt further scrutiny from policymakers and economists as they assess the broader economic outlook for 2026.
