UK inflation rate edges back up to 4 percent

The United Kingdom's inflation rate rose unexpectedly in December, after modest falls in preceding months had taken it from a 40-year high of 11.1 percent in October 2022 to 3.9 percent in November.

Economists had expected the rate to fall again in December, to 3.7 percent, so the fact that it rose by 0.1 percentage points to 4 percent will have been hugely frustrating for the nation's finance minister, Jeremy Hunt.

The UK's Office for National Statistics, or ONS, which calculates consumer price index, or CPI, inflation said the unexpected rise was largely down to hikes in the price of tobacco and alcohol, which rose by 12.8 percent in December after Hunt increased taxes on them in his November budget.

Hunt responded to the ONS' latest figures by noting that inflation had been falling in general terms for several months and could not be expected to fall consistently. He insisted his overall plan to lower inflation was working and that the UK had been hit by global factors, such as surging energy prices, that had pushed up inflation in many other nations.

"As we have seen in the US, France, and Germany, inflation does not fall in a straight line," the BBC quoted him as saying.

CPI inflation in the US rose in December by 0.3 percentage points, to 3.4 percent, while inflation in France went up by 0.1 percentage points, to 3.7 percent, and Germany recorded a 0.1 percentage point rise, also to 3.7 percent.

The UK's central bank, the Bank of England, has a longstanding target of limiting the rate of CPI inflation to 2 percent and has been raising interest rates in recent months in a bid to encourage saving, dry up spending, and lower inflation. Despite the shock uptick in inflation in December, The Telegraph newspaper said the bank is still widely expected to cut interest rates, likely starting in June, from their current 15-year high of 5.25 percent, because energy prices are expected to fall sharply this year, which will ease inflationary pressure.

Rachel Reeves, the spokeswoman on financial issues for the UK's main opposition, the Labour Party, said it is clear to families struggling to make ends meet that prices are rising far faster than earnings and that the cost-of-living crisis is hitting people hard.

"Prices are still rising in the shops, with the average weekly shop 110 pounds ($140) more than it was before the last general election, and the average family is set to be 1,200 pounds worse off under Rishi Sunak's tax plan," she said.

The UK's flagship stock index, the FTSE 100, fell by 1.7 percent in early trading after the inflation rate was announced on Wednesday morning.