UK inflation rises for the first time in 5 months
UK inflation has risen for the first time since July 2025 on the back of higher tobacco and airfare prices.
Data published by the Office for National Statistics on Wednesday (21 January) shows that the Consumer Prices Index (CPI) rose by 3.4% in the 12 months to December 2025, up from 3.2% in the 12 months to November.
Monthly, CPI rose by 0.4% in December 2025, compared with a rise of 0.3% in December 2024.
Alcohol, tobacco, and transport made the largest upward contributions to the monthly change in both the CPIH and CPI annual rates.
Core CPI (CPI excluding energy, food, alcohol and tobacco) rose by 3.2% in the 12 months to December 2025, the same rate as the 12 months to November; the CPI goods annual rate rose from 2.1% to 2.2%, while the CPI services annual rate rose from 4.4% to 4.5%.
“Inflation ticked up a little in December, driven partly by higher tobacco prices, following recently introduced excise duty increases,” said ONS Chief Economist Grant Fitzner.
“Airfares 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’s period. Rising food costs, particularly for bread and cereals, were also an upward driver.”
Fitzner noted that these were partially offset by a fall inrents inflation and lower prices for a range of recreational and cultural purchases.
“The annual increase in the prices for goods leaving factories was unchanged this month, while the increase in the cost of raw materials for business slowed, driven by lower crude oil prices,” he said.
A speed bump – rather than a crash
Although the uptick is larger than expected, for now it’s a speed bump, rather than an indication we are veering off course on the road to price stability, said Adam Deasy, Economist at PwC.
“The central expectation from the Bank of England and forecasters alike is for inflation to sharply decline through 2026, helped by the measures in the Autumn Budget. Growing labour market slack, with yesterday’s data showing a further uptick in the unemployment rate, should also relieve some of the nagging upward pressure that the Bank had its eye on over the coming months.
“A February cut seems premature, not least with the risk of more trade disruption increasing in recent weeks and adding more uncertainty to the external environment. At this stage, with a few more data points in hand by then, the Bank looks more likely to make its move in March.”
