Closing summary
Wall Street stocks rose modestly at the open, with a mood of caution following reports of funding hurdles for Oracle’s data centre plans.
The Dow Jones, S&P 500 and Nasda were flat to 0.3% higher.
Over here, the FTSE 100 index has jumped 1.6%, or 15 points, to 9,839, after a bigger-than-expected drop in UK inflation to 3.2% in November, which cemented expectations of an interest rate cut from the Bank of England tomorrow. The FTSE is on track for its best day in eight months. The pound fell by 0.45% to $1.3366, while yields, or interest rates, on UK government bonds dropped.
Jim Ratcliffe’s chemicals company Ineos has been granted £120m of government funding to help save the UK’s last ethylene plant at Grangemouth, in a deal expected to protect more than 500 jobs.
The investment in the Scottish plant was necessary to preserve a vital part of the country’s chemicals infrastructure, the UK government said. The ethylene produced there was essential for medical-grade plastics production, water treatment and in aerospace and car-building, it added.
Keir Starmer said the investment, with an additional £30m from Ineos, was proof his government would “invest in Britain’s future”. Rachel Reeves, the chancellor who travelled to Grangemouth today with the business secretary Peter Kyle, said the case for intervening was “compelling” and key for Britain’s national security.
Our main stories today:
Rachel Reeves would probably rather not rake over the chaotic run-up to last month’s budget, but it will be high on the agenda on 13 January when Richard Hughes, the recently departed chair of the Office for Budget Responsibility (OBR) appears before the House of Lords economic affairs committee, reports our economics editor Heather Stewart.
Hughes resigned last month, five days after the OBR inadvertently released its budget documents - including details of the chancellor’s tax plans - 40 minutes or so before she stood up to speak in the House of Commons.
He had also courted controversy by publishing a letter setting out the evolution of the OBR’s forecasts, which the Tories seized on to suggest Reeves had misrepresented the health of the public finances.
Prof David Miles from the OBR, who appeared before the same committee on Tuesday, underlined how frustrated the forecaster had been by the flurry of leaks ahead of the budget.
I think that there’s actually an agreement between the Treasury, the OBR, the chancellor, that this wasn’t a very helpful process in many ways - that there was lots of speculation about measures, there were leaks, there was briefing. I don’t think it did anybody any good.
Diageo sells East African beer business to Asahi
The UK drinks giant Diageo, which makes Tusker beer, has struck a $2.3bn (£1.7bn) deal to sell its majority stake in an East African beer business to Japanese drinks giant Asahi.
The deal is the latest move by the Guinness and Johnnie Walker owner to sell off “non-core” parts of the business to improve its performance. Shares in Diageo rose by 1.6% in early trading.
The FTSE 100 firm will sell its 65% shareholding in East African Breweries (EABL) to Asahi Group, in a move which also includes its stake in Kenyan spirits business UDVK.
Diageo committed to a long-term licensing agreement for the business as part of the deal, continuing the production and distribution of Guinness in the region. The sale is expected to complete in the second half of 2026.
It is part of a series of divestments, including sale of Diageo’s stake in Guinness Ghana Breweries earlier this year. Former Tesco boss Dave Lewis, known as “Drastic Dave” for aggressive cost-cutting at Unilever and Tesco, will take over as Diageo chief executive early next year.
Nik Jhangiani, Diageo’s interim chief executive, said:
EABL and Diageo have built the largest beer business in East Africa, a testament to driven people with a passion for the consumers and communities they serve. We are excited to partner with Asahi through the licensing of Diageo brands in the region going forward.
Atsushi Katsuki, Asahi’s president and chief executive, said:
This business is a high-quality, leading company in Kenya, Uganda and Tanzania, with an unrivalled brand portfolio and marketing capabilities, state-of-the-art production facilities and strong market shares.
UK will transfer £2.5bn of Abramovich cash to Ukraine fund, Starmer says
The UK has given its final warning to Roman Abramovich to release £2.5bn from the oligarch’s sale of Chelsea FC to give to Ukraine, telling the billionaire to release the funds in 90 days or face court action.
Keir Starmer told the House of Commons the funds from Abramovich, who is subject to UK sanctions, would be converted into a new foundation for humanitarian causes in Ukraine and that the issuing of a licence for the transfer was the last chance Abramovich would have to comply.
The move comes on the eve of a crucial EU summit, where leaders are urged to agree using Russia’s frozen assets to provide Ukraine with a €90bn loan. Starmer said:
The clock is ticking on Roman Abramovich to honour the commitment he made when Chelsea FC was sold and transfer the £2.5bn to a humanitarian cause for Ukraine.
This government is prepared to enforce it through the courts so that every penny reaches those whose lives have been torn apart by Putin’s illegal war.
Reeves dismisses claims oil windfall tax causes job losses
Rachel Reeves has dismissed claims from North Sea industry leaders that the UK government’s windfall tax on oil and gas profits is causing up to 1,000 job losses a month, particularly in north east Scotland, Severin Carroll is reporting from Scotland.
Speaking to reporters in Grangemouth near Edinburgh after unveiling a £155m deal to upgrade an Ineos petro-chemicals plant, the chancellor was pressed on consistent claims the energy profits levy was deeply damaging for North Sea employers, adding to their mounting operating costs and causing engineering companies to cut jobs.
Asked whether she thought that job losses figure was true or not, she said:
No. No, I don’t.
Well, there have been job losses for a number of years, including before the previous Conservative government introduced the energy profits levy,
Reeves said, referring to arguments the North Sea is an ageing and declining basin with high operating costs.
Aberdeen Chamber of Commerce said the chancellor’s decision not to quickly phase out or remove the levy in her recent budget could lead to the North Sea sector being dead within five years. This dispute has become central to attacks by the Scottish National party, the Conservatives and Reform UK on Labour in the run-up to next May’s Scottish parliament elections.
Reeves said the UK government strategy was to invest in new energy industries like offshore and onshore renewables, working alongside major investors such as Scottish Power and Scottish and Southern Energy, and also building modular nuclear reactors – a technology the Scottish National party government in Edinburgh is resisting.
She said there were “massive opportunities” for new energy jobs to be created. She told the Guardian:
In England and in Wales, we’re investing in new nuclear, creating thousands of jobs, whether that’s the commitment to the new power station at Sizewell or small modular reactors, in Anglesey. We could make those sorts of investments in Scotland if the Scottish government supported it.
Douglas Alexander, the Scottish secretary, who added that Torness nuclear power station, Scotland’s last nuclear generator, was in his East Lothian constituency, said:
[UK energy secretary] Ed Miliband has said categorically he will bring the world’s nuclear industry to Scotland the day after there is a change of approach by the Scottish government.
There is an unscientific, anti-, I would argue, dogmatic approach taken by the Scottish government opposing new build nuclear. At the moment that has the potential to deliver not just baseload capacity as it does in Torness at the moment, but could deliver thousands of well-paid, unionised jobs for decades to come.
So if we’re looking for where the sources of jobs, look at the work that we’re doing in defence, look at the work that we want to do on new build nuclear and we have to ask some searching questions of our political opponents in the Scottish National party.
Updated
CMR Surgical robot gets US green light for gallbladder removal
The UK firm CMR Surgical has had its next-generation surgical robot approved in the US, and will start rolling it out in hospitals stateside next year.
The Cambridge-based company has received the green light from the US regulator FDA for its Versius Plus robot for cholecystectomy procedures (gallbladder removal). It plans to apply for regulatory approval for other indications in the future.
It will be going head to head with Californian rival Intuitive Surgical’s Da Vinci robot. CMR argues that its compact, modular robot is more cost effective than Da Vinci, especially due it its portability and ability be used across multiple operating rooms and specialties.
Versius Plus is already approved in the UK and the EU, and is used by the NHS and private hospitals. Outside of the United States, CMR’s two robotic systems, the first-generation model Versius and Versius Plus, have already completed more than 40,000 surgical procedures (gastro-intestinal, gynaecology, urology and general surgery).
Massimiliano Colella, CMR’s chief executive, said:
This [FDA] clearance represents an exciting new chapter for CMR Surgical as we introduce Versius Plus to the US market. Built on years of global clinical use data, Versius Plus delivers the flexibility and intelligence today’s healthcare institutions need to advance robotic-assisted surgery. It’s inspiring to see our new technology transforming the landscape of surgical care.
Updated
Peter Kyle, the business secretary, insisted that the £150m deal to save the Ineos chemical plant in Grangemouth is “good value for money, for the public purse,” and for workers.
I have been convinced there is a pathway to sustainability, but they needed to get through this period in time to transition to profitability.
My officials and myself came to that conclusion. I think this is good value for money, for the public purse and is very good value, particularly for people who work here.
The sustainability that is going to be produced from here will have a huge impact on the workers here, on the broader community, but also the thousands who work in the supply chain locally.
That supply chain would have collapsed had the government not stepped in and worked with Ineos to get the situation we have today.
Details of £150m deal between UK government and Ineos
More details have emerged about today’s £150m deal between the UK government and Ineos to modernise an ethylene plant at Grangemouth west of Edinburgh, securing more than 500 jobs. Our Scotland editor Severin Carrell reports:
The money includes a £50m grant from the government, a repayable £75m commercial loan brokered by NatWest underwritten by a loan guarantee from the government, and £30m investment from Ineos itself. That money is expected to be spent by Ineos over the next five years.
The site makes polymers and chemicals for plastics, medicines and chemicals industries. The deal was agreed after Ineos boss Sir Jim Ratcliffe approached the government in October, asking for investment to help fund future investment.
Speaking alongside Rachel Reeves, the chancellor, as she unveiled the deal at Grangemouth, Andrew Gardner, chairman of O&P (Olefins & Polymers) for Ineos, said the firm had already spent £400m on upgrading and modernising the plant over the last four years; that investment cycle was due to end in April next year.
Douglas Alexander, the Scottish secretary, said the government investment was based on evidence from Ineos the money would ensure the plant was profitable and sustainable in the long term and was supplying its products for British manufacturing.
It’s clear that there is a route to profitability for Grangemouth on the basis of the commitments they have made today. We have been encouraged and impressed by what we’ve heard from Ineos management.”
Colin Pritchard, Ineos’s head of sustainability and external affairs for its O&P division, said the money would be devoted to improving energy efficiency, cutting its carbon emissions and improving performance.
He said the site, which runs an ethylene cracker that takes North Sea gas and liquified petroleum gas (LPG from the US to make its petro-chemicals, had been under “extreme pressure” from surging energy costs linked to Russia’s invasion of Ukraine and the UK’s carbon taxes.
The co-chairs of Scotland’s Just Transition Commission, an influential Scottish government-funded independent body, Satwat Rehman and Prof. Dave Reay, hope that the UK government’s £120m investment in Ineos’ chemical plant at Grangemouth will “help achieve a more managed and orderly transition to low carbon manufacturing at Grangemouth”.
More detail on the revised timeline for the plant’s operations in light of this public support would be welcome, as this should give greater reassurance to workers, communities and businesses linked to the site. It will also be critical for us to better understand the nature of conditions attached to these public funds so as to safeguard the social, economic and environmental interests of taxpayers. The potential for governments to use conditionalities to support a just transition is a key focus of our work as a Commission and we welcome any opportunity to support policymakers in developing practical proposals to this end.
We once again call on all levels of government to work together with employers, workers and communities to urgently develop anticipatory plans for the highest emitting industrial sites in Scotland so that the social and economic aspects of greening and/or closure can be managed and workers supported meaningfully through the transition. We need to avoid any repeat of the reactive responses to unplanned changes we have seen with the Grangemouth refinery and Mossmorran ethylene plant.
Business groups and unions welcome UK rejoining Erasmus+
UK business organisations and trade unions have welcomed the news that the UK will rejoin the EU’s Erasmus+ exchange scheme, as first reported by the Guardian.
Emma Rowland, trade policy advisor at the Institute of Directors, said this is one of the first tangible achievements to have been secured post-reset summit in May.
She said the IoD’s own data shows strong support for student exchange, with 86% listing it as the second most beneficial aspect of a Youth Mobility Scheme.
Closer engagement with the UK’s international partners is a way for students and workers at the start of their career to gain valuable cultural and language experience. Greater transfer of ideas through research, study and exchange of workers can also help support innovation and productivity, while deepening ties with the EU.
We are also calling for the negotiation of a broader Youth Experience Scheme, including elements such as mobility for work, volunteering and traineeships with the EU, which would be particularly beneficial for sectors like hospitality and retail, which typically employ large numbers of young people and have struggled to find workers following the loss of movement of potential recruits between the EU.
Unions also welcomed the move. TUC general secretary Paul Nowak said:
This is another step forward to repairing the damage of the Tories’ botched Brexit deal, which set back workers on both sides of the Channel.
The TUC and European unions have long been calling for easier, fairer pathways for people to live, work, and study in each other’s territories – with rights and standards safeguarded. This agreement helps realise that call.
The UK rejoining Erasmus+ will provide UK workers of all ages, apprentices, school pupils and adult learners with valuable opportunities including educational school trips, vocational training and traineeships in other countries – opportunities which have been badly missed over the past few years.
Updated
Paddy Power and Betfair to pay £2m settlement after failing to protect users
Paddy Power and Betfair have reached a £2m settlement with the gambling industry regulator over social responsibility failings, including allowing one customer to bet for nearly eight hours solid.
The Gambling Commission said the online betting and gaming brands, which are owned by Flutter Entertainment, had fallen “far short” of what was expected during a routine compliance assessment performed in 2024.
Systems that were supposed to detect early indicators that gamblers may be experiencing harm and trigger checks on their wellbeing were found to have been insufficiently sensitive, resulting in late intervention.
Failings identified by the Gambling Commission included one customer being allowed to stake £86,000 over a 16-day period, during which time they lost £6,000.
Warner Bros Discovery urges shareholders to reject Paramount’s $108.4bn takeover bid
Warner Bros Discovery has urged shareholders to reject a $108.4bn hostile takeover offer from Paramount Skydance, branding it “inadequate” amid an extraordinary corporate battle to control the legacy media conglomerate.
WBD agreed to sell its storied movie studios, HBO cable network and streaming service to Netflix in a $82.7bn deal earlier this month, setting the stage for a seismic shift in Hollywood’s industrial landscape.
But Paramount, which had privately bid for WBD before the Netflix deal was unveiled, swiftly countered with an all-cash offer and vowed to take it directly to shareholders. Unlike Netflix, Paramount – which is controlled by the billionaire Ellison family – bid for the entire company, which also includes the CNN news network.
Samuel A Di Piazza Jr, chairman of WBD’s board, said in a statement on Wednesday morning:
Following a careful evaluation of Paramount’s recently launched tender offer, the Board concluded that the offer’s value is inadequate, with significant risks and costs imposed on our shareholders. This offer once again fails to address key concerns that we have consistently communicated to Paramount throughout our extensive engagement and review of their six previous proposals.
Rachel Reeves says case for £120m intervention at Grangemouth chemical plant was ‘compelling’
The UK chancellor has said that the case for intervening to save the Ineos chemical plant in Grangemouth was “compelling”.
The government is investing £120m to save the UK’s last ethylene plant at Grangemouth, in a deal expected to protect more than 500 jobs.
Rachel Reeves talked of a “genuine partnership” and said the government had been in discussions “over the last few weeks and months”. She vowed to protect British industry, and said this was vital for Britain’s national security.
Visiting Grangemouth in Scotland with Peter Kyle, the business secretary, Reeves said:
There are loads of things that government can’t do, but there are also some things that business can’t do, and that is why you need a partnership, and indeed, with the workers and the trade unions to be able to have a sort of sustainable model for the future.
And the world is incredibly uncertain at the moment, but we’ve got to protect British industry, British manufacturing. And here, with what you. do with ethylene, it is absolutely critical for our national security in so many ways as well. And so the case for intervening was compelling, and we will always take action to support British industry and manufacturing. You saw it with steel. You see it here today in Grangemouth.
Updated
CBI: Manufacturing activity improves in December
Manufacturing activity in Britain improved in December following months of budget speculation, and the phased resumption of car production after the Jaguar Land Rover cyberattack.
Industrial orders fell again in December, but at the slowest rate since September, according to the CBI’s monthly industrial trends survey.
The business lobby group said its order book balance rose to -32 in December from -37 in November, when orders weakened in the run-up to Rachel Reeves’ budget on 26 November. However, the measure remains well below its long-run average of -14.
Export orders fell by the smallest amount since July. Output expectations for the next three months also rose to their highest since September.
CBI economist Ben Jones said:
Activity was clearly held back by uncertainty ahead of the budget, and with that now out of the way firms can look to 2026 with a little more certainty.
Significant headwinds remain nonetheless, with demand still soft, high energy, labour and regulatory costs squeezing margins, and uncertainty around key policies and global conditions continuing to weigh on confidence.
Elliott Jordan-Doak, senior economist at Pantheon Macroeconomics, said:
Looking ahead, we think easing borrowing costs and greater policy certainty should help boost optimism in the coming months, helping to support activity.
FTSE 100 leads European gains; Brent crude jumps 2.3% to over $60 a barrel
The FTSE 100 index has stormed 1.7% ahead, leading gains on European stock markets.
The UK’s blue-chip index climbed by nearly 164 points to 9,848, following the bigger-than-expected drop in UK inflation.
Joshua Mahony of Scope Markets said:
Coming off the back of a jobs report that saw a higher unemployment rate, lower employment count, and higher claimants, markets can not only look forward to a rate cut but also a likely dovish tone from the Bank of England tomorrow.
While markets are currently pricing a mere 50% chance that we see either 25bp or 50bp worth of cuts next year, the deterioration in the jobs market coupled with falling inflation could help raise hopes of a more accommodative BoE than has been predicted.
Germany’s Dax edged 0.1% higher while France’s CAC was flat, Italy’s FTSE MiB rose by 0.6% and Spain’s Ibex rose 0.3%.
Oil prices have jumped after Donald Trump ordered “a total and complete” blockade of sanctioned Venezuelan oil tankers, building on the recent moves to stifle the movement of crude through the region.
Brent crude rose by $1.3 to $60.25 a barrel, a 2.3% gain. This comes after a 5% drop in oil prices this week as traders were encouraged by apparent progress on a Russia-Ukraine peace deal.
Mahony said:
With the president having recently laid out a strategy that focuses primarily on controlling business interests within the Western Hemisphere, this is a clear move to end the trade of cheap, sanctioned oil from South America to the likes of China. While yesterday had seen WTI [West Texas Intermediate] fall into the lowest level in almost five years, the potential implications of a Russia-Ukraine deal have today been overshadowed by the news that Trump has taken further steps to limit Venezuelan exports.
Updated
UK house prices and rents rise at slower rate
UK house prices rose at a slower annual rate in October, while rent increases also slowed, according to official figures.
The average price of a home increased by 1.7% to £270,000 in the 12 months to October, down from 2% in the 12 months to September.
The average private rent rose by 4.4% to £1,366 in the 12 months to November, down from 5% in the 12 months to October. Rent increases have slowed for 11 months, after high rates in recent years fuelled by a shortage of rental properties and strong demand from tenants.
Average UK house prices increased by 1.7%, to £270,000 in the 12 months to October 2025, down from 2.0% in the 12 months to September.
— Office for National Statistics (ONS) (@ONS) December 17, 2025
Average UK private rents rose by 4.4%, to £1,366 in the 12 months to November 2025, down from 5.0% in the 12 months to October. pic.twitter.com/qebtXK8pMq
Commenting on today’s house price data for October 2025 and rents data for November 2025, ONS Head of Housing Market Indices Ian Boreham said: (quote 1 of 2) pic.twitter.com/7wp696HxL1
— Office for National Statistics (ONS) (@ONS) December 17, 2025
Ian Boreham continued: (quote 2 of 2)
— Office for National Statistics (ONS) (@ONS) December 17, 2025
Read the full article ➡️ https://t.co/cnp4KWRcGe pic.twitter.com/yjxGRcsHoy
UK minister says Ineos did right thing; Exxon at fault over its plant closure
Douglas Alexander, the UK government’s Scottish secretary, has said the £120m deal to save Ineos’s ethylene plant at Grangemouth was possible because Ineos had previously invested around £100m upgrading the facility, our Scotland editor Severin Carrell reports.
Speaking on BBC Radio Scotland this morning, he contrasted that with the decision by ExxonMobil to close its ethylene plant at Mossmorran in Fife early next year, with the loss of around 430 jobs.
ExxonMobil’s chairman Paul Greenwood has defended the closure, claiming that the UK’s windfall taxes on North Sea oil and gas operators, and higher emissions taxes, meant Mossmorran had no future. “My international competitors do not have those costs,” he said last week.
The Ineos deal, which will be managed by NatWest on behalf of the UK government, will be formally announced by the chancellor Rachel Reeves, the UK business secretary Peter Kyle and Alexander later this morning.
Alexander told BBC Radio Scotland ExxonMobil’s past decision-making at Mossmorran was in “stark contrast” to the dialogue the government had enjoyed with Ineos.
When we sat down with Jim Ratcliffe it was pretty clear what was needed in order to be able to deliver a future for the chemical facility in Grangemouth. There had been significant Ineos investment in the plant.
In contrast, the Mossmorran facility is now 40 years old, it was built to have a 20 year lifecycle. Alas, there hasn’t been the scale of investment that many of us would wished to see in Mossmorran over recent years.
The management were not able to give us a pathway to profitability.
Gillian Martin, the Scottish government’s cabinet secretary for climate action and energy, welcomed the UK government’s move.
The Scottish government has been calling upon UK government for months now to intervene to protect jobs at Grangemouth and Mossmorran at a scale seen in other parts of the UK. This news will give a much-needed boost to Grangemouth community and the workers at Ineos O&P.
The Scottish government announced £8.5m investment last week at the Grangemouth industrial cluster including in MiAlgae and Celtic Renewables which will create up to 460 jobs, demonstrating that a long term industrial future at the site is achievable. We will continue to do all we can, within our limited powers, to achieve that.
Sharon Graham, the general secretary of the union Unite, which represents hundreds of oil and chemicals industry workers, also welcomed the decision, but said it “must not be a one-off”.
Many promises have been made in the past. This needs to be the start of a new direction of travel. We cannot forget that Grangemouth is also the site where this government has allowed Scotland’s only refinery to close, rather than produce much needed sustainable aviation fuel.
There has to be a joined-up strategy for a workers’ transition, backed by investment. British industry must be backed in a much better way, or jobs and skills will continue to go.
Updated
German business confidence unexpectedly falls in December
Sentiment among businesses in Germany has worsened again.
The business climate index from the Munich-based Ifo institute fell to 87.6 points in December, from 88 points in November. Analysts polled by Reuters had forecast an increase to 88.2.
Companies are more pessimistic about the first half of 2026. “The year is ending without any sense of optimism,” the institute said.
Germany has struggled to regain momentum this year, with only modest growth forecast following two years of economic contraction.
Klaus Wohlrabe, head of surveys at the institute, said:
This year there are no presents for the German economy.
The manufacturing index fell, with almost all sectors affected. The number of new orders declined, and companies are planning to scale back production.
In the service sector, confidence has fallen back into negative territory, across almost all service sectors. The only exception was restaurants, which reported a very strong December.
In trade, the index also worsened, as retailers were unhappy with Christmas sales.
In construction, the business climate remained unchanged at a low level.Companies assessed the current situation as worse, but were less sceptical about the coming months.
Oil prices jump 1.5% as Trump orders Venezuela blockade
Oil prices have risen as much as 1.5%, after Donald Trump ordered “a total and complete” blockade of all sanctioned oil tankers entering and leaving Venezuela.
Brent crude rose by 1.5% to $59.79 a barrel earlier, and is now trading up 1.1% at $59.54 a barrel. US West Texas Intermediate Crude climbed by 1.5% to $56.12 a barrel, and is now 1.2% higher at $55.93 a barrel.
This comes a day after oil prices traded near five-year lows on progress in the Russia-Ukraine peace talks. A deal could mean that western sanctions on Moscow are eased, leading to more oil supply.
A trader told Reuters:
The price is sentiment-driven by the Venezuelan news for today, but overall, export volumes from Venezuela are relatively small in the global supply share. With all eyes on the Russia-Ukraine discussions, the market is still under downside risk.
Trump’s moves have ramped up pressure on Venezuela’s authoritarian leader Nicolás Maduro.
Last week, US forces seized an oil tanker off Venezuela’s coast that was traveling across the Caribbean. The tanker was thought to be loaded with about 2m barrels of Venezuela’s heavy crude, according to the New York Times. The Venezuelan government accused the US of “blatant theft” and described the seizure as “an act of international piracy”, further heightening tensions between the two countries.
The Food and Drink Federation has taken a closer look at food prices in today’s UK inflation data. It says:
By category, we have seen a mixed performance. The ONS reported on 48 main categories this month, of which 26 saw inflation slowing, with inflation rising for the other 22 categories.
Prices rose the fastest for beef and veal (27.7%), chocolate (17.3%), whole milk (14.8%) and coffee (14.5%).
Prices fell for nine categories, with the largest drops for: olive oil (-16.2%), flours (-6.1%), pasta (-4.2%) and sugar (-4.0%).
Karen Betts, the group’s chief executive, said:
It’s good to see food inflation starting to fall, not least as shoppers fill their cupboards for the festive season. Nonetheless, food prices remain higher this Christmas than last and many consumers are having to make tough choices about what they buy this year.
Manufacturers continue to work hard to cut costs and pass any potential savings on to consumers, but themselves continue to face significant cost pressures. To really impact this persistent food inflation, we need government to redouble efforts with food businesses to reduce costs, like energy, and boost growth and productivity to bring down prices in the coming weeks and months across the food and drink supply chain.
Christmas dinner and festive treats up to 70% more expensive, reports Which?
Despite some lower food prices in the official inflation figures, the cost of Christmas dinner and festive treats has gone up, a survey shows.
Shoppers are paying up to 70% more for Christmas chocolate treats compared with last year, while the price of a turkey has jumped by as much as £15, according to the consumer champion Which?.
The group analysed a range of ingredients for a typical Christmas dinner, as well as other typical festive treats including mince pies, sparkling wine and chocolates.
Festive chocolate had the steepest mark-up this year. Among the biggest risers was a Lindt Lindor milk chocolate truffles treat box at Asda up 72% to £1.98 compared with £1.15 last year. At Morrisons, Lindt Milk Chocolate Teddy Christmas tree decorations increased from £3.50 in 2024 to £6 in 2025, up 71%.
There were a few annual declines in food prices:
Olive oil -16.2%
Flours and other cereals -6.1%
Pasta products and couscous -4.2%
Sugar -4%
Frozen seafood -2.4%
Rice -1.7%
Jams, marmalades and honey -1%
Most other food prices continued to rise at an annual rate but at a slower pace.
Anna Leach, chief economist at the Institute of Directors, said:
Inflation has fallen back decisively in today’s data, and by more than expected, bringing the rate to its lowest since March. Food price inflation has eased sharply to its lowest rate since April, despite typically rising at this time of year, while services inflation – a key indicator of domestic price pressure – has also edged down. Together, these figures increase the likelihood of a welcome interest rate cut tomorrow.
Recent indicators point to a notable weakening in both the economy and the labour market, with unemployment reaching its highest level since 2015. Today’s inflation outturn has also come in below the Bank of England’s expectations, driven in part by unexpectedly soft food prices. The Bank will also assess the impact of the recent budget on the outlook for inflation. And despite being trailed as actively disinflationary, the budget’s effects are more mixed due to the increase in spending and borrowing over the next two years. But on balance, the case for a rate cut has been made.
The chancellor, Rachel Reeves, made tackling the cost of living a major target of last month’s autumn budget, alongside £26bn of tax increases to help repair the public finances and fund the end of the two-child benefit cap.
“Getting bills down is my top priority,” she said after the inflation figures. “I know families across Britain who are worried about bills will welcome this fall in inflation.”
Updated
Pound tumbles, UK bond yields fall after inflation drop
The pound has fallen against the dollar, as an interest rate cut tomorrow looks more likely.
Sterling has fallen by 0.67% to $1.3343, its lowest level in a week, and is set for its biggest one-day drop since early November. Yields on UK government bonds fell sharply across maturities. The FTSE 100 index rose by 1%.
Markets now see a 98.8% chance of a rate reduction at the end of the Bank of England’s meeting at noon tomorrow, from 4% to 3.75%. Before the data, the probability of a rate cut was 90%.
Investors are now betting on 66 basis points of cuts by next December, up from 58bps before the inflation figures.
Updated
The TUC is calling for a “sequences of rate cuts” in coming months to ease pressure on households and businesses.
TUC general secretary Paul Nowak said the Bank of England has been “too cautious” this year.
Inflation may be falling, but many working people are still struggling to afford the basics.
The government acted to protect living standards and push back against inflation in last month’s Budget, but more must be done.
The economy is fragile and high interest rates are draining confidence from households and firms. It’s vital that we now boost demand.
The Bank of England has been too cautious this year, and inflation is already lower than they expected only last month. So an interest rate cut this week must be the start of a sequence of reductions over the months ahead. It’s long overdue and it’s the shot in the arm that the economy needs.
Lower rates will give firms the confidence to invest and help get more households spending.
Here’s our full story:
'Interest rate cut certain' following inflation drop
An interest rate cut tomorrow is certain following the notable drop in inflation in November, economists say.
Suren Thiru, economics director of the Institute of Chartered Accountants in England and Wales, said:
While the financial squeeze on households and businesses remains severe, these figures offer reassurance that the UK is moving towards a more modest inflation environment, helped by lower food prices.
Softening services and core inflation offer hope that underlying price pressures are becoming less sticky. The growing downward pressure from a loosening labour market and wilting economy should help keep it on a downward path.
UK inflation’s journey back to target should accelerate appreciably in 2026 with lower food and fuel costs alongside the energy bill changes announced in the Budget likely to pull it back to 2% by next summer.
These figures, alongside the recent deluge of downbeat data, mean that an interest rate cut tomorrow looks certain. The vote split could be more dovish than many expect as policymakers will have now assessed the budget’s deflationary impact.
Food and non-alcoholic drink prices rose by 4.2% in the 12 months to November, down from 4.9% in October. Prices of cakes, biscuits and breakfast cereals fell but rose a year ago.
There were other, smaller downward effects on inflation from dairy products and sugar, jam and chocolate.
Tobacco prices also pulled inflation down, with prices in the alcohol and tobacco division rising at an annual rate of 4% in November, down from 5.9% in October, marking the lowest rate since December 2022.
Clothing and footwear prices fell by 0.6% in the 12 months to November, compared with a rise of 0.3% in October. This rate matched the change in February, and was last lower in March 2021.
Grant Fitzner went on to say: (quote 2 of 2) pic.twitter.com/jnOLaEH9b1
— Office for National Statistics (ONS) (@ONS) December 17, 2025
UK inflation slows sharply to 3.2% as food prices ease – business live
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Inflation in the UK slowed more than expected last month because of easing food prices, marking the third month that inflation has fallen.
Inflation, measured by the consumer prices index, fell to an annual rate of 3.2% in November, from 3.6% in December, according to the Office for National Statistics.
The core rate, which strips out volatile food and energy costs, dropped to 3.2% from 3.4%.
Grant Fitzner, the ONS chief economist, said:
Inflation fell notably in November to its lowest annual rate since March. Lower food prices, which traditionally rise at this time of the year, were the main driver of the fall with decreases seen particularly for cakes, biscuits, and breakfast cereals,
The Consumer Prices Index (CPI) rose by 3.2% in the 12 months to November 2025, down from 3.6% in October 2025.
— Office for National Statistics (ONS) (@ONS) December 17, 2025
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Jim Ratcliffe’s chemicals company Ineos has been granted £120m of government funding to help save the UK’s last ethylene plant at Grangemouth, in a deal expected to protect more than 500 jobs.
The investment in the Scottish plant was necessary to preserve a vital part of the country’s chemicals infrastructure, the UK government said. The ethylene produced there was essential for medical-grade plastics production, water treatment and in aerospace and car-building, it added.
The Agenda
9am GMT: Germany Ifo business climate index
9.30am GMT: UK House prices
11am GMT: UK CBI Industrial trends survey
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