Inflation rises to three.4 per cent: First improve since July 2025 in new blow to Rachel Reeves and Keir Starmer

The Consumer Prices Index annual inflation rate rose to 3.4 per cent in December from 3.2 per cent in November, official data revealed today.

The Office for National Statistics said the rate of CPI and CPIH (Consumer Price Index with Housing costs) both increased for the first time since July 2025.

A hike to tobacco duties, which was announced at the autumn budget in November, pushed up overall inflation – as did the price of plane tickets, bread and cereals. 

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.

‘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 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.

‘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.’

More to follow 

Chancellor Rachel Reeves speaks at the World Economic Forum meeting in Davos yesterday