Consumer price inflation,
UK: December 2025
Chancellor of the Exchequer, , said:
“My number one focus is to cut the cost of living. At the budget
I announced £150 off energy bills, a freeze to rail fares for the
first time in 30 years, a freeze to prescription charges for the
second year running, and an increase to the national minimum and
living wage. Money off bills and into the pockets of working
people is my choice. There's more to do, but this is the year
that Britain turns a corner.”
Background:
- Taken together the OBR's forecast shows government policy
will lead to a reduction in CPI inflation of 0.4 percentage
points in 2026/27.
- This is the biggest near-term reduction in inflation due to
government policy ever forecast by the OBR at a single fiscal
event, outside of a crisis
British Chambers of
Commerce
Responding to the latest inflation data, published by the
Office for National Statistics, Stuart
Morrison, Research Manager at the British Chambers of
Commerce said:
“Today's data is a stark
reminder that the UK inflation
waters remain choppy.
“With CPI rising to 3.4% in
December, it's clear the path to hitting the Bank of
England's 2% target will have further twists and turns. Hopes
of another interest rate cut at the start of
February now look very unlikely.
“Our latest survey shows inflation remains a key
concern for businesses cited by 56% of
respondents. The threat of more US tariffs in
the coming weeks will only increase price concerns among the
firms we represent.
“Business
confidence remains weak, and the Budget was a missed
opportunity to turbocharge the economy. As firms look
ahead to uncertain 2026, they need the Government to
deliver on growth. That means action to boost
investment, transform productivity and support
trade.”
CBI
Martin Sartorius, Lead Economist, CBI, said:
“Inflation edged up slightly in December, broadly in line with
consensus expectations. However, we anticipate that this increase
will prove to be temporary. Price pressures are set to ease
noticeably this year, particularly as the impact of last year's
energy and utility price hikes fades away.
“We expect the Bank of England's Monetary Policy Committee to cut
rates again early this year, if inflation slows as anticipated.
However, the Committee will remain cautious about the timing of
the next cut and the scope for any additional reductions as it
looks for further evidence that underlying price pressures and
inflation expectations are easing.”
