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Economists polled by Reuters had expected a modest decline in the annual headline consumer price index to 3.8%, after a sharper-than-expected decline in November to 3.9%.
On a monthly basis, the headline CPI rose 0.4%, above consensus expectations of 0.2% and up from -0.2% in November.
The ONS said: “The largest upward contribution to the monthly change in both the CPI and CPI annual averages came from alcohol and tobacco while the largest downward contribution came from food and non-alcoholic drinks.”
The closely watched core CPI – which excludes volatile food, energy, alcohol and tobacco prices – was 5.1% year-on-year, higher than Reuters' forecast of 4.9% and unchanged from November.
The ONS said the largest upward contribution to the underlying figure came from travel and transport services.
Inflation remains on track at 2%.
“As we have seen in the United States, France and Germany, inflation does not fall in a straight line, but our plan is working and we must stick to it,” British Finance Minister Jeremy Hunt said in a statement.
“We have made difficult decisions to control borrowing and are now turning the corner, so we need to stay on the path we have set, including boosting growth with more competitive tax levels.”
US inflation also rose in December to an annual rate of 3.4% from 3.1% in November, while the Eurozone CPI jumped to 2.9% from 2.4% the previous month.
The Bank of England will hold its next monetary policy meeting on February 1, after raising interest rates rapidly over the past two years in an attempt to curb runaway inflation.
“This unexpected rise in inflation is a timely reminder that the battle against high inflation is far from over, especially with core and services inflation stubbornly rising,” said Suren Thero, Director of Economic Affairs at ICAEW.
“While inflation may rise again in January, following the increase in Ofgem's energy price cap, it should fall at a good pace after that, supported by the expected fall in energy bills from April and lower food inflation.”
Although ongoing tensions in the Red Sea could make core inflation more challenging, Theroux suggested the rate could decline over the course of the year as slowing wage growth and economic stagnation begin to suppress demand.
This was echoed by PwC economist Jake Feeney, who said headline inflation remains on track to return to the Bank of England's 2% target as early as April.
He added: “The Bank of England is likely to respond to easing inflation pressures by materially lowering its forecasts in the next February monetary policy report.”
“This would pave the way for interest rate cuts later this year, perhaps as early as May if the labor market continues to slow.”
A new round of jobs data on Monday also highlighted the difficult path ahead for the British central bank, as it decides when and how to cut interest rates in 2024. Markets are currently pricing in more than 100 basis points of cuts to the benchmark index. Average throughout the year.
The number of job openings fell by 49,000 during the fourth quarter of the year, while the unemployment rate remained largely flat at 4.2%.
Wage growth, a key data point for the bank, slowed significantly in the three months to the end of November. Since inflation falls faster than this rate, average wages are still growing in real terms.
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