UK Inflation Climbs for the First Time in Six Months: Holiday Spending Pushes CPI to 3.4%

Official data released on Wednesday, January 21, 2026, revealed that UK inflation rose to 3.4% in December, up from 3.2% in November. This marks the first increase in the Consumer Price Index (CPI) in six months, driven primarily by higher tobacco taxes and increased holiday-related costs. The figure slightly exceeded market expectations of 3.3%.

The rebound in inflation strengthens the case for the Bank of England to delay interest rate cuts next month as it continues its battle against persistent price pressures. Meanwhile, the unemployment rate held steady at 5.1% at the end of 2025, maintaining its highest level in nearly five years and highlighting the ongoing strain on the British economy.