UK inflation rises to 3.4%, driven by tobacco and airfares

Inflation has risen to 3.4% in the year to December, driven by higher tobacco prices and airfares, according to official figures.

The increase in average prices across the UK economy – the first in five months – was just above expectations, with many economists predicting only a slight uptick to 3.3%.

The cost of airfares was a contributor “likely because of the timing of return flights over the Christmas and New Year period”, the Office for National Statistics (ONS) said. It also reflected an increase in tobacco duty introduced in late November.

It is the last set of monthly inflation figures released before the Bank of England’s decision on interest rates in February.

In addition to tobacco and transport prices, “rising food costs, particularly for bread and cereals, were also an upward driver,” said ONS chief economist Grant Fitzner.

“These were partially offset by a fall in rents inflation and lower prices for a range of recreational and cultural purchases.”

In response to the figures, Chancellor Rachel Reeves said her priority was cutting the cost of living, citing measures in her November Budget including a freeze to rail fares and prescription charges.

“Money off bills and into the pockets of working people is my choice.

“There’s more to do, but this is the year that Britain turns a corner,” Reeves said.

Inflation in the UK is a measure of the Consumer Prices Index, which is a virtual basket of hundreds of everyday goods and services selected by the ONS that includes things like bread, fruit, furniture and different items of clothing.

The prices of these items are tracked by the ONS over the previous 12 months, and the basket is regularly updated to reflect shopping trends.