UK inflation surges from 2.5% to 3% in another blow to Rachel Reeves
The latest UK inflation figures released by the Office for National Statistics (ONS) have delivered a fresh blow to chancellor Rachel Reeves, as inflation rises once again. The consumer prices index (CPI) inflation increased to 3% in the 12 months to december, up from 2.5% the previous month, marking the highest annual rate since march last year.
Rising costs behind inflation surge
Grant Fitzner, chief economist at the ONS, attributed this sharp rise to multiple factors, including a weaker-than-expected fall in airfares and significant hikes in private school fees. “Inflation increased sharply this month to its highest annual rate since march last year,” he stated.
Fitzner explained that airfares did not decline as they typically do in january, partly due to the timing of flights over the christmas and New Year period. “This was the weakest january dip since 2020,” he noted.
Additionally, food and non-alcoholic drinks saw price increases, with notable rises in the cost of meat, bread, and cereals. Another major contributing factor was the substantial rise in private school fees, which increased nearly 13% due to VAT rule changes.
Rachel reeves responds
Reacting to the figures, chancellor Rachel Reeves reaffirmed her commitment to easing the financial strain on households. “Getting more money in people’s pockets is my number one mission,” she stated. “Since the election, we’ve seen year-on-year wages after inflation growing at their fastest rate – worth an extra £1,000 a year on average – but I know that millions of families are still struggling to make ends meet.”
Reeves outlined the government’s strategy to tackle inflation and boost economic growth, including significant investment in infrastructure and regulatory reforms. “That’s why we’re going further and faster to deliver economic growth. By taking on the blockers to get Britain building again, investing to rebuild our roads, rail and energy infrastructure, and ripping up unnecessary regulation, we will kickstart growth, secure well-paid jobs and get more pounds in pockets,” she asserted.
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Core inflation also on the rise
Beyond CPI, core inflation – which excludes volatile items such as food and energy – has also increased. According to the ONS data, Core CPI rose by 3.7% in the 12 months to january 2025, up from 3.2% in december. This metric is a key consideration for the bank of england when determining whether to adjust interest rates.
With inflation proving to be more persistent than anticipated, pressure is mounting on both the government and the Bank of England to take further action. While the government seeks to drive growth and improve wages, many households continue to feel the squeeze from rising costs.
As the economic landscape evolves, all eyes will remain on the Chancellor’s policies and whether they can effectively curb inflation while ensuring sustainable growth for the UK economy.
