Overview
- Official figures show CPI rose to 3.4% in December from 3.2% in November, while CPIH also increased for the first time since July 2025.
- ONS said the uptick was led by higher tobacco prices following autumn Budget duty hikes, pricier air travel over the holidays, and costlier bread and cereals.
- The inflation rate came in just below the 3.5% consensus forecast, indicating a modest upside surprise rather than a sharp reacceleration.
- Chancellor Rachel Reeves said cutting living costs is her top priority and cited measures including £150 off energy bills, a rail fare freeze, a continued prescription charge freeze, and higher minimum and living wages.
- Separate data reported a 43,000 fall in payrolls in December and a cumulative loss of 216,820 jobs since Labour’s July 2024 election victory, underscoring recent labour market softness.