UK inflation ended last year on a ‘high’, but falls are coming in 2026 21 January 2026 UK inflation increased from 3.2 in November to 3.4 per cent in December, keeping the UK at the top of the G7 leaderboard, but big falls are expected from January onwards, the Resolution Foundation said today (Wednesday). CPI inflation expectedly increased in December, driven by tobacco duty, airfares and food. Food prices rose by 4.5 per cent in the 12 months to December, up 0.8 per cent compared with November. Bread and cereals made the largest contribution to this rise, which is disappointing given such staples make up a larger share of spending for lower-income families. As a result, the UK ended 2025 with the highest headline inflation of any G7 economy – an unwanted position it has now held for the past seven months. Better news is coming this year, with the Bank of England forecasting a broad-based 0.5 percentage point fall in January. With inflation still below the Bank’s forecast, it remains on track to head back towards its target rate over the course of 2026. James Smith, Research Director at the Resolution Foundation, said: “UK inflation ended last year on a ‘high’ with an unwelcome uptick in price rises. “And while Britain hopes to lead the G7 economic leaderboard for growth, it has instead spent the last seven months at the top of the charts for inflation instead. “But big falls are due in 2026, with inflation finally returning to back to more normal levels. However, the scars from a long period of acute price pressures will continue to be felt by families.”
