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.

Concerns about wage growth potentially limiting further rate cuts have been highlighted by external MPC member Megan Greene. She noted that the decline in wage growth observed throughout 2025 "may have run its course."

Disclaimer: This story has been auto-aggregated and auto-summarised by a computer program. This story has not been edited or created by the Feedzop team.