THE Chancellor’s bid to curb the cost of living went up in smoke after tobacco tax rises helped push up inflation.
Prices rose higher than expected by 3.4 per cent in the year to December, despite Rachel Reeves making the household squeeze her top priority.
It was the first increase in five months, as air fares also rose.
Food and non-alcoholic drink prices were up by 4.5 per cent on the year.
Tobacco prices went up due to duty rises from November’s Budget.
Ms Reeves had tried to ease inflation, partly by freezing prescription charges and rail fares and cutting £150 off energy bills.
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She vowed 2026 will be the “year Britain turns a corner”, saying: “My number one focus is to cut the cost of living.”
But Shadow Chancellor Sir Mel Stride said prices had gone up “because of Labour’s economic mismanagement”.
He added: “A record-high tax burden and irresponsible borrowing are stifling growth and fuelling inflation – leaving working people worse off.”
Suren Thiru, of experts ICAEW, called December’s inflation rise a “temporary blip”.
He added that “lower energy bills from April coupled with falling fuel and food costs should pull it back to 2% by the summer”.
