Latest UK CPI Update: Inflation Is Taking a Small Hit

What Those Numbers Actually Tell Us

According to the Office for National Statistics, the Consumer Price Index slid from 2.6% in November to 2.5% in December.

That’s a modest dip, but inflation is still hovering above the Bank of England’s sweet spot of 2%.

Households Are Likely to Find Comfort (for a Short While)

If you’ve been tracking the news, you’ll probably feel a tiny sigh of relief as prices seem to have paused a little. Think lower grocery costs, maybe a tiny break in energy bills—good news, but the party still has music playing.

The Autumn Budget Gave the Inflations a Double‑Edged Sword

Even with the dip, Chancellor Rachel Reeves faces a trade‑off. The budget will likely keep prices relatively high for the rest of the year, which could offset any gains in the CPI.

CBI’s Paint‑On‑The-Canvas

• Martin Sartorius, Principal Economist at CBI, says inflation is still a bit above the 2% target.
• He points out that strong wage growth keeps the price engine running.
• CBI warns that the Autumn Budget will push inflation higher, keeping it elevated.

How It Might Affect You

When you make your shopping list, roll those premium brands in your mind and lean towards sale items. You’ll likely keep more cash in your pocket. Yet, keep eyes peeled—budget policies could raise costs for most goods down the line.

Fears of stagflation persist despite ‘temporary’ inflation drop

Pat McFadden ‘rumoured’ to replace Reeves as the Chancellor

Economists are warning inflation could rise ‘above 3%’ which will be blow for interest rates

Inside the Fraying Budgets: The Starmer‑Chancellor Tug-of-War

Rumour mill reports that the partnership between Prime Minister Starmer and First Minister Reeves is in freefall. It’s a political roller‑coaster with more twists than a paper‑thin roller coaster at the London Fair.

Rate Cuts Still on the Horizon

“Persistent, above‑target inflation keeps the Monetary Policy Committee (MPC) betting on a gentle, step‑by‑step easing through 2025,” says Joe Nellis, an economic adviser at MHA accounting. “The next cut? February is still the sweet spot.” A small dip in rates should provide a breather for businesses and households navigating sky‑high borrowing costs.

Economic Slow‑down: A Dark Cloud on the Horizon

• Reeves remains “dogging the economy” – meaning he’s still pushing for stronger growth.
• Bill movements: Bond yields rock higher because critics worry that the UK could fall into a debt spiral if inflation keeps dripping.
• “If inflation keeps riding above 2 %,” warns Nick Saunders, CEO of Webull UK, “the bank’s ability to cut rates in the medium term becomes a real headache, especially with rising yields.

Inflation is squeezing the real value of UK debt. The higher the debt price, the bigger the cost of borrowing, so the Chancellor is burning bright to keep the‑fast‑moving financial markets on side.

The Pound: A Ledger‑Holder and a Source of Pain

A dampened pound feeds inflationary pressures – especially through energy prices. The market’s no longer betting on a parade of rate cuts in 2025. Even so, a pinching drop to 2.5 % might let the Chancellor bag a breath of relief.

What’s Next?

Let’s keep an eye on the bonds and the key rate “cut‑calendar.” If the policy keeps easing slowly, we might see a modest relief for the economy – but the fallout’s still brewing.

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