UK inflation rise driven by alcohol and tobacco prices

The Office for National Statistics (ONS) said the rate of Consumer Prices Index (CPI) inflation rose to 4% in December, up from 3.9% in November.

Most economists had expected the rate to edge lower to 3.8%.

It comes after tobacco duty increased last November, with alcohol also driving inflation higher, which offset further falls in food prices.

Grant Fitzner, ONS chief economist, said: “The rate of inflation ticked up a little in December, with rises in tobacco prices due to recently introduced duty increases.

“These were partially offset by falling food inflation, where prices still rose but at a much lower rate than this time last year.

“Meanwhile, the prices of goods leaving factories are little changed over the last few months while the costs of raw materials remain lower than a year ago.”

Responding to the news, Chancellor Jeremy Hunt said that inflation “does not fall in a straight line”.

He said: “As we have seen in the US, France and Germany, inflation does not fall in a straight line, but our plan is working and we should stick to it.

“We took difficult decisions to control borrowing and are now turning a corner, so we need to stay the course we have set out, including boosting growth with more competitive tax levels.”

Shadow chancellor Rachel Reeves said: “Any rise in inflation is bad news for families who are worse off after fourteen years of economic failure.

“Prices are still rising in the shops, with the average weekly shop £110 more than it was before the last general election, and the average family set to be £1,200 worse off under Rishi Sunak’s tax plan.

“Britain cannot afford another five years of economic failure. Only Labour can deliver the change Britain needs and make working people better off.”