Surprise hike in inflation rate confounds economist predictions

Inflation has taken a surprise upswing to 4% in the year to December 2023 – confounding analyst expectations that it would fall.

The consumer price index rose from 3.9% in November, and came as retailers launched sales in the run-up to Christmas in order to try and boost sales.

Meanwhile, the cost of raw materials fell by 2.8%, down from a decrease of 2.7% in November, and the cost of goods leaving factories rose by 0.1%, up from a decrease of 0.1%.

Office of National Statistics chief economist Grant Fitzner 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 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.”