IoD press release Latest inflation uptick is not a cause for concern
Commenting on today’s data from the Office for National Statistics that showed the annual rate of CPI inflation rising to 3.4% in December 2025, from 3.2% in November, Anna Leach, Chief Economist at the Institute of Directors, said:
“Today’s pick-up in inflation was driven as expected by an increase in tobacco duty and a sharp increase in air fares. Food inflation edged up to 4.5% as did services inflation, to 4.4%. However, core inflation held steady. These measures are closely watched by the Bank as key drivers and indicators of underlying inflationary pressure.
“Despite this latest increase, inflation is below the Bank of England’s expectations, and is still expected to fall back decisively during 2026. Inflation for 2025 as a whole averaged 3.4%, a little below the OBR’s latest forecast, and they expect inflation to come down to 2.5% this year, aided by Budget decisions on household energy bills and fuel duty. These decisions knock 0.3% points of headline inflation in 2026, and 0.5% in April alone. Lower inflation and a pretty tepid economy should create space for interest rates to come down further, and provide some welcome support to businesses and consumers.”
