UK inflation rises for first time in five months to 3.4% in December

The Guardian - World NewsCenter-LeftEN 3 min read 100% complete by Tom KnowlesJanuary 21, 2026 at 08:00 AM

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medium article 3 min

UK inflation rose to 3.4% in December, according to the Office for National Statistics, marking the first increase in five months and exceeding economists' forecasts. The rise was driven by factors including higher air fares and tobacco duties, as well as increased food costs. The increase suggests the Bank of England is likely to hold interest rates steady at its February meeting. While a February rate cut is now less likely, economists still anticipate cuts later in the year if inflation eases. Chancellor Rachel Reeves reiterated her commitment to tackling the cost of living, highlighting measures announced in the autumn budget. Despite the December increase, inflation is still expected to fall overall in 2026.

Key Entities & Roles

Key Player Opposition Context

KPMG UK 40% Monetary Policy Committee 50% Yael Selfin 50% Grant Fitzner 60% Rachel Reeves 70% Office for National Statistics 70% Bank of England ×280% UK ×290%

Keywords

uk inflation 100% interest rates 80% bank of england 70% consumer prices index 60% cost of living 60% monetary policy 50% wage growth 40% economic forecasts 40%