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

It marks the first time the inflation rate has increased since February 2023, with most economists having predicted that it would drop lower to 3.8%.

The jump comes despite a sharp fall in food and fuel prices. Tobacco duty increased last November, with alcohol also driving inflation higher.

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."

Annual CPI inflation rate increases for the first time since February 2023

Chancellor Jeremy Hunt said that inflation "does not fall in a straight line" after it rose to 4% in December as he insisted the Government's plan was working. 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."