UK consumer prices unexpectedly accelerated in December, driven by new taxes on tobacco products, and are likely to lead to growing calls for interest rate cuts at the Bank of England.
Data from the Office for National Statistics on Wednesday showed that the Consumer Price Index – which measures a wide range of prices for goods and services – rose 4.0% year-on-year, from a 3.9% increase in November.
Economists polled by the Wall Street Journal expected inflation to fall to 3.8%.
Core inflation, which excludes volatile changes in energy and food prices, remained above the headline rate, at 5.1% year-on-year in December, the same level as in November, and higher than the consensus forecast of 4.9%.
The largest upward contribution to the monthly change in inflation came from tobacco, after the government announced a tax increase in its latest Budget statement. Prices rose by 4.1% between November and December, the Office for National Statistics said.
Write to Ed Frankl at edward.frankl@wsj.com
