UK inflation unexpectedly rises to 3.4% in December, the first increase in five months

According to the recent figures released by the Office for National Statistics (ONS), inflation in the UK has reportedly increased for the first time in five months, reaching 3.4% in December.

The Office for National Statistics said that the annual inflation rate as measured by the consumer price index (CPI), rose to 3.4% from 3.2% in November. This uptick follows a period of falling rates in October and stagnation in previous months, surpassing economist's forecasts of a modest rise to 3.3%.

According to The Guardian, the significant increase in inflation further suggests that the Bank of England’s Monetary Policy Committee will keep interest rates at 3.75% when it meets in February.

Most economists now expect a reduction in April, provided that price pressures in the UK subside over the coming months.

On the contrary, the inflation is still expected to trend downward in 2026, as the situation has been deteriorating since September’s 3.8 reading. Furthermore, it is projected that the inflation will be near the target of 2% by mid-year.

The Bank has further said that it anticipates Chancellor Rachel Reeves’ measures-including relief on energy bills, and fuel duty freeze will help mitigate headline inflation this year. While more details are emerging, recent employment figures suggest the inflationary pressures are easing. Wage growth slowed to 4.5% in the three months to November, down from 4.6% in the three months to October.

The Bank of England’s Monetary Policy Committee cut the Bank rate to 3.75% in December, though almost half of its members voted for no change due to increasing worries about the persistence of structural inflation.