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UK inflation ticked higher in December 2025, as economists had widely anticipated, with festive travel demand and higher tobacco duties pushing prices up at the end of the year. The Office for National Statistics (ONS) released its Consumer Prices Index (CPI) data today (January 21, 2026), showing the annual inflation rate rose to 3.4% in December, up from 3.2% in November, delivering a fresh blow to Chancellor Rachel Reeves.

This matched forecasts from Pantheon Macroeconomics and aligned closely with the overall economist consensus for a modest rebound. Key drivers included a hike in tobacco duties announced in the November Budget, which contributed to upward pressure.

Inflation has been static or falling since last summer, and had fallen sharply in November following an easing of rising food costs.

However, December's CPI rate comes in slightly below the 3.5% that a consensus of economists had been forecasting for the month.

ONS chief economist Grant Fitzner said: "Inflation ticked up a little in December, driven partly by higher tobacco prices, following recently introduced excise duty increases.

"Air fares 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.

"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."

Ms Reeves nevertheless pledged that 2026 is the "year that Britain turns a corner", saying: "My number one focus is to cut the cost of living.

"At the budget I announced £150 off energy bills, a freeze to rail fares for the first time in 30 years, a freeze to prescription charges for the second year running, and an increase to the national minimum and living wage.

"Money off bills and into the pockets of working people is my choice.

"There's more to do, but this is the year that Britain turns a corner."