UK inflation rise complicates outlook on interest rates

Surprise increase is blow to Bank of England’s fight against rising prices –but could be followed by falls

• UK inflation rises as cost of tobacco and alcohol increases

Inflation went in the wrong direction at the end of 2023. It might seem like a small, possibly insignificant, reversal of a downward trend, but December’s rise in the consumer prices index (CPI) to 4% in December from 3.9% in November is a blow to the government and the Bank of England in their battle against rising prices.

Setting aside the quirks in the figures, such as the rise in tobacco prices after a sharp increase in duty, the real problem was how businesses continue to charge each other ever-larger bills for their services.