A shopper browses fruit and vegetables for sale at an indoor market in Sheffield, UK. The OECD recently predicted that the UK will experience the highest inflation among all advanced economies this year.
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The U.K. inflation rate rose to 3.4% in December, above forecasts of 3.3% from economists polled by Reuters.
The inflation rate had cooled sharply to 3.2% in the twelve months of November, with the data encouraging the Bank of England to cut interest rates at its final meeting of the year last month.
Core inflation, excluding energy, food, alcohol, and tobacco, stood at 3.2% in December, unchanged from November, according to the latest figures from the Office for National Statistics.
The figures, coming after employment data on Monday which showed further cooling in the labor market, raise doubts over whether the BOE will proceed with its expected February rate cut.
“We expect the Bank of England to remain on hold for at least the next couple of meetings,” Matthew Ryan, head of Market Strategy at Ebury, commented Monday.
“The hawks on the committee have long emphasised upside risks to U.K. inflation, but these arguments are losing steam amid the deteriorating employment picture and the moderation in wage pressures,” he noted.
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Source: https://www.cnbc.com/2026/01/21/uk-inflation-december-2025-uk-prices.html