The UK is facing renewed pressure from the rising cost of living as inflation, which had been gradually declining, ticked back up unexpectedly in the latest Office for National Statistics (ONS) data. The consumer price index (CPI) rose by 4.2% year-on-year, reversing part of the recent progress in inflation control.

The increase was driven by higher energy, housing, and food prices, with services inflation also showing persistent strength. Core inflation, which excludes volatile items like energy and food, remains elevated at 5.1%, signaling underlying economic price pressures.

Supermarket chains have warned of supply-side disruptions and cost pass-throughs in the food sector, particularly for imported goods and fresh produce. While below 2022 peaks, wholesale energy prices remain volatile, with utility providers beginning to reprice customer tariffs. The housing market also contributes upward pressure through rising rents and increased mortgage costs tied to high interest rates.

The Bank of England is now under renewed scrutiny over the timing of potential interest rate cuts. With headline inflation stalling, markets have scaled back expectations for rate reductions in the year’s first half. The Monetary Policy Committee has signaled it will maintain a cautious stance until more apparent evidence emerges that inflation is on a sustained downward path.

Household budgets continue to face real pressure. Wage growth has slowed, and many sectors are seeing an increase in arrears and defaults. Charities and advocacy groups report higher demand for food banks, energy support schemes, and housing assistance, particularly among low- and middle-income households.

The Treasury has acknowledged the inflation uptick but insists the overall trend remains downward. Chancellor Jeremy Hunt pointed to broader fiscal stability and emphasized restraint over further public spending. However, business leaders and unions call for more direct interventions, including targeted tax breaks and public sector wage agreements adjustments.

If inflation remains sticky through spring, the policy balance between growth and price stability will face heightened political and economic pressure ahead of the following budget announcement.