UK inflation climbed to 3.4% in the year to December, driven largely by higher tobacco prices and more expensive flights, new official data shows. The rise marks the first increase in inflation for five months and was slightly above forecasts, which had suggested a more modest rise to 3.3%.
The Office for National Statistics said air fares were a key factor, partly due to the timing of Christmas and New Year return journeys being captured differently compared with last year. An increase in tobacco duty introduced in late November also fed through into higher prices. Transport costs overall rose by 4% over the year, adding further pressure.
Food prices also edged higher, with bread, cereals and vegetables among the items pushing inflation upwards. However, these increases were partly balanced by a slowdown in rent rises and lower prices for some leisure, cultural and recreational goods, according to ONS chief economist Grant Fitzner. This release is the final inflation update before the Bank of England considers interest rates next month.
Politically, the figures prompted contrasting reactions. Chancellor Rachel Reeves said the government remained focused on easing household costs, pointing to policies such as frozen rail fares and prescription charges. Shadow chancellor Mel Stride criticised government policy, arguing that high taxes and borrowing were worsening inflation. Compared with neighbouring countries, the UK’s inflation rate remained higher, with Germany at 2% and France at just 0.7% in December, underlining the continued squeeze on British consumers.
