UK consumer price inflation rose to 3.4% in December 2025, up from November’s eight-month low of 3.2% and slightly above market expectations of 3.3%. The year-end acceleration in inflation, which may complicate the Bank of England’s efforts to steer price growth back toward its 2% target, was primarily driven by faster price increases in alcohol and tobacco (5.2% vs. 4.0% in November) and transport (4.0% vs. 3.7%). Additional upward pressure came from food and non-alcoholic beverages (4.5% vs. 4.2%), restaurants and hotels (3.8% vs. 3.5%), and miscellaneous goods and services (2.2% vs. 2.1%). These increases were partly offset by easing inflation in housing and utilities (4.9% vs. 5.1%) and recreation and culture (2.7% vs. 2.9%). Meanwhile, core inflation, which excludes volatile items such as unprocessed food and energy, remained unchanged at 3.2%, holding at its lowest level since December 2024.
