The Consumer Price Index (CPI) inflation is projected at 3.5% in 2025, easing to 2.5% in 2026 before returning to the Bank of England’s 2% target in 2027. As 2026 begins, the headline figures tell a sobering story. Shop price inflation has unexpectedly accelerated to its fastest pace in nearly two years, with food prices staples like meat, fish and fruit leading the increase. Retailers report that energy costs and higher employer National Insurance contributions are squeezing margins and passing costs onto households. Overall inflation remains stubbornly above the Bank of England’s 2 per cent target, exacerbating cost-of-living pressures that many had hoped were easing. For millions of British families already stretched by mortgages, rent and stagnant wage growth, these figures are not abstract percentages they are real rises in weekly shop bills and household outgoings. Public expectations of future inflation have also climbed, according to recent surveys, a reminder that people’s perceptions often shape economic behaviour as much as official statistics. Policymakers face a delicate balancing act. After a series of interest rate cuts in 2025, the Bank of England is now widely expected to hold rates steady in the near term, as inflation refuses to dip swiftly towards target levels. While some economists foresee modest declines later in the year, the recent data complicates the case for further rate reductions. Yet this is not merely a question of central banking. Underlying the numbers are deeper structural issues that require political leadership and strategic policy: productivity that lags peers, tax and welfare choices that shape disposable incomes, and energy and supply chain costs that increasingly filter through domestic prices. Without sustained action across economic policy, the burden of inflation however measured will continue to fall disproportionately on those least able to absorb it. Inflation may no longer dominate front-page headlines as it did at its peak, but its everyday impact remains profound. For many households, price rises in essentials still outstrip the modest comforts of lower headline CPI, eroding living standards even as official rhetoric focuses on future improvements. In this moment, the challenge for Britain is not just to chase a number, but to ensure that the economic recovery is inclusive, resilient, and sustainable. 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. 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.’
Burnham Issue
Greater Manchester Mayor Andy Burnham has been at the centre of a major conflict within the Labour Party after being blocked from standing as a parliamentary candidate in the upcoming Gorton & Denton by-election. The party’s National Executive Committee (NEC), led by Sir Keir Starmer, voted to prevent Burnham’s candidacy citing concerns about the cost and risk of a mayoral by-election if Burnham quit his post. This move has sparked significant backlash within Labour. More than 50 Labour MPs have protested the decision, arguing there was no legitimate reason to bar Burnham and warning it reinforces perceptions of internal factionalism and centralised control. Andy Burnham has said he is “disappointed” after being blocked from standing as a candidate for the upcoming parliamentary by-election in Gorton and Denton by Labour’s ruling body. As a directly elected mayor, Burnham had to get approval from Labour’s national executive committee (NEC), after he applied to be a candidate on Saturday. But Labour said the party had decided to deny him permission to stand to “avoid an unnecessary mayoral election, which would use substantial amounts of taxpayers’ money and resources”. Burnham, a former minister, is widely seen as a potential leadership challenger to Prime Minister Sir Keir Starmer should he return to Westminster.Burnham expressed concern about the ruling’s “impact on the important elections ahead of us” and said he would return with “full focus” to his role as mayor. “I decided to put myself forward to prevent the divisive politics of Reform from damaging that. We are stronger together and let’s stay that way,” Burnham said. However, he criticised how the ruling was made known on Sunday saying, “The fact that the media was informed of the NEC decision before I was told you everything you need to know about the way the Labour Party is being run these days”. The seat in Greater Manchester is vacant after former Labour minister Andrew Gwynne stood down on Friday as an MP on health grounds.
