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Inflation in the UK has risen for the first time in five months to 3.4% in December, according to official figures, suggesting the Bank of England will hold off from making a change to interest rates next month.<\/p>\n
The Office for National Statistics<\/a> said the annual inflation rate, as measured by the consumer prices index (CPI), increased from 3.2% in November, after falling in October and flatlining in the previous three months. The figure overshot City economists\u2019s forecasts of a modest rise to 3.3%.<\/p>\n The increase in inflation suggests the Bank of England\u2019s rate-setting committee<\/a> will keep interest rates at 3.75% when it meets in February. However, most economists are now expecting a cut in April if price rises in the UK ease over the coming months.<\/p>\n Despite the rise, inflation is still expected to fall overall in 2026, having been on downward trajectory since September\u2019s 3.8% reading. The Bank of England expects inflation to near target of 2% by the middle of this year.<\/p>\n The chancellor, Rachel Reeves, made tackling the cost of living a key target of November\u2019s autumn budget<\/a>, alongside \u00a326bn of tax increases to help repair the public finances and fund the lifting of the two-child benefit cap.<\/p>\n The Bank has said it expects her measures, including relief on energy bills, prescription charges and fuel duty, to cut headline inflation this year.<\/p>\n