U.K. inflation unexpectedly rose to 4% year-on-year in December due to an increase in alcohol and tobacco prices.
Annual consumer price index in the U.K. had been trending down since February 2023. This marked the first rise on a year-on-year basis.
The increase was also higher than a forecast polled by Reuters for a 3.8% rise after falling at a sharper-than-expected in November to 3.9%.
The headline inflation rose by 0.4% month-on-month in December, which was also above the forecast for a 0.2% rise and up from a contraction of 0.2% in November.
The Office for National Statistics noted that the largest upward contribution to the monthly change in both CPIH (consumer Prices Index including owner occupiers’ housing costs.) and CPI annual rates came from alcohol and tobacco while the largest downward contribution came from food and non-alcoholic beverages.
Meanwhile, U.K. core CPI, which excludes volatile food, energy, alcohol and tobacco prices, rose 5.1%, which was above a 4.9% expectation polled by Reuters.
