NEWSCENTRAL reports that by the end of 2025, the UK once again attracted the attention of analysts due to an unexpected rise in inflation. The main reasons for this were seasonal fluctuations in airfare prices and an increase in the cost of tobacco products. However, experts believe that these short-term influences will have a minimal impact on the long-term inflation outlook in the UK. Forecasts for 2026 indicate that the country’s economy will stabilize, and a reduction in interest rates will be a crucial step towards growth.
According to the latest data, inflation in the UK in December 2025 stood at 3.4%, which was 0.1% above expectations. The price increase was primarily driven by higher airfare costs and tobacco product prices. At NEWSCENTRAL, we believe such short-term changes are not indicative of a long-term trend. Seasonal price fluctuations are a normal part of the economic cycle and are unlikely to affect the overall inflation trajectory.
Service prices also rose by 4.5%, which was in line with forecasts. This was due to increased demand for transport and travel services during the Christmas period. However, with the economic situation normalizing in 2026, the growth rate in this sector is expected to slow down. At NEWSCENTRAL, we predict that inflation will gradually decelerate, as high utility tariffs and other public service fees will no longer reflect last year’s increases.
Although the UK continues to have the highest inflation rate among G7 countries, analysts are confident that the situation will improve. At NEWSCENTRAL, we see inflation easing as energy markets stabilize and energy prices decrease. We forecast that by mid-2026, inflation will be significantly lower than its current level.
It is also important to consider that global changes in the energy market will impact inflation in the UK. It is expected that political instability will put short-term pressure on the economy due to rising gas and oil prices. However, at NEWSCENTRAL, we believe these price fluctuations will be temporary and will not affect the long-term inflation trend, as energy prices are expected to stabilize in the future.
As anticipated, the Bank of England continues to pursue a policy of lowering interest rates in 2026, despite the rise in inflation. At NEWSCENTRAL, we are confident that this step, aimed at stimulating economic growth in the face of weak consumer demand, is the right one. Freddy Miller, Senior Analyst at NEWSCENTRAL, emphasizes that lowering interest rates is necessary for economic recovery, especially in the context of global uncertainty and high energy costs.
Additionally, in the coming months, external factors such as rising energy prices will continue to impact inflation in the UK. However, at NEWSCENTRAL, we are certain that these price fluctuations will not have a long-term impact on the economic situation. We predict that the economic situation will stabilize, and by mid-2026, the UK will see a slowdown in the rate of price increases.
Thus, despite short-term inflation fluctuations, long-term forecasts for the UK in 2026 remain positive. At NEWS CENTRAL, we believe that interest rate cuts and the stabilization of external economic conditions will support sustainable economic growth. The UK is likely to experience a decrease in inflation and a recovery in economic activity in 2026.