The UK can expect to see big falls in the rate of inflation this year, according
to the Resolution Foundation.
The think tank's prediction comes despite an increase in December 2025 that saw
the UK end the year with the highest headline inflation of any G7 economy – an
unwanted position it has now held for the past seven months.
UK inflation increased from 3.2% in November to 3.4% in December, keeping the UK
at the top of the G7 leaderboard.
CPI inflation expectedly increased in December, driven by tobacco duty, airfares
and food. Food prices rose by 4.5% in the 12 months to December, up 0.8%
compared with November. Bread and cereals made the largest contribution to this
rise, which is disappointing given such staples make up a larger share of
spending for lower-income families.
The think tank says that better news is coming this year, with the Bank of
England forecasting a broad-based 0.5 percentage point fall in January. With
inflation still below the Bank's forecast, it remains on track to head back
towards its target rate over the course of 2026.
James Smith, Research Director at the Resolution Foundation, said:
'UK inflation ended last year on a 'high' with an unwelcome uptick in price
rises.
'And while Britain hopes to lead the G7 economic leaderboard for growth, it
has instead spent the last seven months at the top of the charts for
inflation instead.
'But big falls are due in 2026, with inflation finally returning to back to
more normal levels. However, the scars from a long period of acute price
pressures will continue to be felt by families.'