Britain’s annual rate of consumer-price inflation was 3.4% in December, up from 3.2% in November in the first increase since July, the Office for National Statistics said Wednesday. Economists polled by The Wall Street Journal expected 3.3%.

Higher tobacco prices and airfares have pushed the UK inflation rate to 3.4% in the year to December, according to official figures. The increase in average prices across the UK economy - the first in five months - was just above expectations, with many economists predicting only a slight uptick to 3.3%.

British consumer prices rose by more than expected in December but services inflation, closely watched by the Bank of England, came in as forecast by analysts, official data showed on Wednesday.

The Bank of England has cut interest rates from 4% to 3.75%, the lowest level since February 2023. Analysts are divided about whether the Bank will cut again when it next meets in February.

UK inflation rose to 3.4% in December, its first increase in five months, driven by higher tobacco taxes and airfares, according to Office for National Statistics data.

The pound held steady on Wednesday, after data showed UK inflation picked up more than expected in December, which could lower the chances of more aggressive rate cuts from the Bank of England this year.