U.K. consumer prices accelerated unexpectedly in December, driven by new taxes on tobacco products, and likely pushing out calls for rate cuts at the Bank of England.
The consumer price index–which measures a wide basket of goods and services prices–rose 4.0% on year, from a 3.9% increase in November, data from the Office for National Statistics showed Wednesday.
Economists polled by The Wall Street Journal expected inflation to ease to 3.8%.
Core inflation, which strips out the volatile changes in energy and food prices, remained higher than the headline rate, at 5.1% on year in December, the same as in November and was higher than consensus expectations of 4.9%.
The largest upward contribution to the monthly change in inflation came from tobacco, after the government announced higher taxes in its most recent budget statement. Prices rose 4.1% between November and December, the ONS said.
Write to Ed Frankl at edward.frankl@wsj.com
