Inflation rises unexpectedly to 3.4 % what to do if you're struggling

UK inflation has risen to 3.4% in the year to December, up from 3.2% in November representing the first increase in five months. The rise came in slightly above economists’ expectations of 3.3%, though a small uptick had been on the cards.

Inflation remains above the Bank of England’s 2% target, but the latest figures are largely driven by seasonal and one‑off factors rather than a renewed surge in underlying prices.

What caused inflation to rise?

According to the Office for National Statistics (ONS), several key drivers pushed inflation upward in December:

• higher airfares, linked to increased travel demand over Christmas and New Year
• tobacco duty increases introduced in late November
• rising food costs, particularly bread and cereals

Some of this was offset by:

• lower rents and inflation
• cheaper recreational and cultural goods, such as some media and entertainment categories

In short, these figures reflect seasonal travel costs and duty changes rather than a broad‑based price surge.

Putting it into context (and why not to panic)

A rise in inflation grabs attention, but it does not mean every price is about to shoot up tomorrow. Our resident consumer finance expert Vix Leyton explains it well: “When inflation rises, it’s natural to wonder when you’ll actually feel it. The important thing to know is that inflation doesn’t hit all at once. It tends to show up gradually, and different prices move at different speeds, some are hares and some are tortoises.

"Some everyday costs, like food or fuel, can change fairly quickly because they’re influenced by global markets and supply costs. Other things, such as services, rents or wages, usually take much longer to adjust.

"For most people, the odds are you are already taking steps to make your money work as hard as it can. You are budgeting, comparing prices, cutting back where possible and being more thoughtful about spending. That means inflation is often something you are already responding to, even if it does not feel like a conscious decision.

"That’s why rising inflation doesn’t mean everything suddenly becomes unaffordable, or that people need to rush into making big financial changes. What households usually experience is a slow squeeze rather than a sudden shock. As overused as it might be, “keep calm and carry on” is genuinely the right message here, whether you want it on your tea towels or not.

“Understanding the timescales can help take some of the fear out of the headlines and keep the focus on steady, practical steps rather than panic.”

Her point is simple: most people adjust naturally as prices shift. This isn’t a cliff‑edge moment; it’s more of a slow tightening, and one you’ve probably already been adapting to.

What to do if you’re struggling with household bills

If rising costs are making things difficult, there is help available. A few practical steps:

1. Make sure you're claiming everything you're entitled to - use a benefits calculator to check your eligibility as many households miss out on support they could be receiving.
2. Check government support schemes - these may include the household support fund and discretionary housing payments you can apply for via your council.
3. Speak to your suppliers - energy and wtaer firms may offer hardship grants and affordable repayment plans.

We also have a cost-of-living hub with a range of resources to help if you’re struggling with household bills.