UK inflation saw an unexpected rise to 4% in December, as the cost of alcohol and tobacco added the biggest contribution to figures since 2006.
According to the latest figures from the Office for National Statistics (ONS) Consumer Prices Index, inflation rose from 3.9% in November and was not in line with city economist predictions of a fall to 3.8%.
The surprise uptick came largely as a result of prices in the alcohol and tobacco division, which surged 12.8% in the year to December 2023, compared with a rise of 10.2% in November.
Recent changes in the autumn statement saw the government increasing tobacco duty.
Tobacco prices rose by 4.1% between November and December, compared with a 0.3% rise between the same two months last year, leading to an annual increase of 16%.
Subscribe to Grocery Gazette for free
Sign up here to get the latest grocery and food news each morning
ONS chief economist Grant Fitzner said rising tobacco prices 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.”
In other areas of the grocery sector, food and non-alcoholic beverage prices rose by 0.5%, compared with a rise of 1.6% a year ago.
The annual rate of inflation was 8%, marking the ninth consecutive month of decline from a high of 19.2% in March 2023 – the highest annual rate seen for over 45 years.
The easing in food inflation was driven by milk, cheese and eggs, while other smaller but notable downward contributions include meat, fish, sugar and jam.
