Surprise increase in inflation for December

UK inflation rose again in December 2023, according to the latest data from the Office for National Statistics (ONS).

The consumer prices index (CPI) measure of inflation stood at 4% in the 12 months to December, up from 3.9% in the year to November. Economists had forecast a slight fall.

Higher prices for tobacco and alcohol were behind the surprise uptick, as well as increased costs for transport and recreational goods and services such as DVDs, games consoles, sports equipment, live music and theatre tickets.

Food prices are still rising, but at a much lower rate than this time last year. The largest downward contribution to the monthly CPI figure came from food and non-alcoholic beverages.

Other countries including France, Germany and the United States had also seen a “slight uptick in annual inflation in December”, ONS chief economist Grant Fitzner told the BBC’s Today programme.

Despite the rise, the Bank of England is still expected to cut interest rates this year.

The base rate currently stands at 5.25%, a 15-year high, following 14 consecutive hikes aimed at bringing inflation down.

A fall in energy prices is expected to help drive down overall inflation and economists anticipate a rate reduction around May or June.