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Inflation increased to 3.4% in December, slightly higher than economists expected, driven up by food costs, and the prices of tobacco and airfares, according to the latest figures from the Office for National Statistics (ONS).
The figure is up from the 3.2% recorded in November. On a monthly basis, the index increased by 0.4% in December 2025. This compares with a rise of 0.3% during the same month in 2024.
It comes as prices for alcohol and tobacco rose by 5.2% in the year to December. Tobacco duty increases in late November contributed to a 3% monthly price rise in the sector.
Meanwhile, transport costs rose by 4% in the 12 months to December, up from 3.7% in November. Air fares were a primary driver, increasing by 28.6% during the month as people travelled over Christmas and the New Year.
Food and non-alcoholic beverages prices rose by 4.5%, with bread, cereals and vegetables the main contributors to the upward movement in this category.
Offsetting the increases, housing and household services inflation eased to 4.6% from 4.8%. This was led by a slowdown in owner occupiers’ housing costs, which reached their lowest rate since May 2023.
Fuel prices also showed a negligible effect on the overall rate. The average price of petrol stood at 136.3 pence per litre, the same level as December 2024.
Commenting on today’s inflation figures for December, ONS chief economist Grant Fitzner said: “Inflation ticked up a little in December, driven partly by higher tobacco prices, following recently introduced excise duty increases. Airfares also contributed to the increase with prices rising more than a year ago, likely because of the timing of return flights over the Christmas and New Year period. Rising food costs, particularly for bread and cereals, were also an upward driver.
“These were partially offset by a fall in rent inflation and lower prices for a range of recreational and cultural purchases. The annual increase in the prices for goods leaving factories was unchanged this month while the increase in the cost of raw materials for business slowed, driven by lower crude oil prices.”
