UK inflation ticks up, surprising analysts
Inflation in the UK rose to 3.4% in December 2025, breaking a five-month streak of declines.
This was slightly higher than the City economists' consensus of 3.3%, though still just under what the Bank of England had predicted.
Prices had peaked at 3.6% back in October before dropping off.
What's happening with interest rates?
The Bank of England is likely to keep interest rates steady next month, but could cut them by April if inflation cools off again.
The goal is to get inflation down to 2% by mid-2026—a target that might be easier thanks to recent government moves like energy bill relief and lower fuel taxes.
Wages slow down, which helps
Wage growth has eased slightly, now at 4.5%.
This slowdown actually helps take some pressure off prices rising even more—making it a good sign for anyone hoping things get more affordable soon.