21 Jan 2026Data published by the Office for National Statistics (ONS) has revealed that inflation rose to 3.4% in the year to December. The rise was fuelled by higher airfares and tobacco prices, the ONS found, and marks the first increase in inflation in five months. Rising food costs, particularly for bread and cereals, also helped to push inflation higher. The increase in inflation suggests that the Bank of England's Monetary Policy Committee (MPC) will keep interest rates at their current level of 3.75% when it next meets in February. Responding to the data, Chancellor Rachel Reeves said: 'My number one focus is to cut the cost of living. At the Budget I announced £150 off energy bills, a freeze to rail fares for the first time in 30 years, a freeze to prescription charges for the second year running and an increase to the national minimum and living wage.'