UK inflation inches up in December but a decline toward 2% is expected in 2026

Inflation in the United Kingdom rose in December for the first time in five months, pushing further above the Bank of England’s target. The Office for National Statistics said on Wednesday that the consumer prices index rose by an annual rate of 3.4% in December, up from 3.2% the month before. It said increases in taxes on tobacco products and trips abroad over Christmas contributed to the increase. The increase was slightly lower than anticipated, with most economists predicting a rise to 3.5%. They see December’s rise as a temporary blip on a downward path towards the Bank of England’s target rate of 2%, which should see it cut interest rates again.