LONDON, Jan 15 Reuters British inflation figures will be closely watched on Wednesday as a sharp jump in government borrowing costs, concerns about domestic and global price pressures and a weak economy put growing pressure on finance minister Rachel Reeves.

Economists polled by Reuters expect the annual rate of consumer price inflation to remain at 2.6 in December.

That is above the 2.5 which the Bank of England forecast in early November. Last month following higher than expected November inflation data the BoE said it expected inflation to increase slightly further in the near term.

Services inflation, which the BoE views as a key measure of underlying price pressures, is expected by economists to fall to 4.9 in December from 5.0 the month before.

Markets on Tuesday were pricing in a 40basispoint reduction in the BoE39;s Bank Rate by December 2025 effectively one quarterpoint rate cut and a 60 chance of a second.

The BoE in November said measures in Reeves39; Oct. 30 budget would likely add just under 0.5 percentage points to inflation at its peak between 2026 and 2027, causing inflation to take a year longer to return sustainably to its 2 target.

Sanjay Raja, chief UK economist at Deutsche Bank, said he expected the 25 billion pound 30 billion hike in employers39; social security contributions and Britain39;s minimum wage to keep price momentum sticky in the first half of 2025.

A survey on Wednesday showed twothirds of British retailers plan to raise prices…