What was the UK inflation rate in December?

The UK inflation rate rose to 3.4% in December.

Did the Bank of England change interest rates?

No, the Bank of England kept interest rates on hold at 3.75%.

What are the expectations for future interest rate cuts?

The Chancellor hopes for further rate reductions in the coming months, with 2026 anticipated to be a key year for turning the corner on inflation.

Home / Business and Economy / UK Inflation Stays Stubbornly High at 3.4%

UK Inflation Stays Stubbornly High at 3.4%

5 Feb

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Summary

UK inflation unexpectedly rose to 3.4% in December.
Bank of England kept interest rates steady at 3.75%.
Chancellor hopes for rate cuts following budget measures.

UK Inflation Stays Stubbornly High at 3.4%

In December, UK inflation experienced an unexpected rise, reaching 3.4% according to the consumer price index. This marks the first increase in five months and remains significantly above the Bank of England's 2% target.

Consequently, the Bank of England's Monetary Policy Committee has opted to hold interest rates steady at 3.75%. This decision follows six previous rate cuts since mid-2024, with the most recent being a quarter-point reduction in December.

Chancellor Rachel Reeves expressed hope for further rate reductions in the upcoming months. This outlook is supported by inflation-fighting measures, including utility bill cuts, introduced in her November budget. She anticipates 2026 will be a pivotal year for addressing inflation.