UK inflation rose unexpectedly to 4% in December, new figures show.
Inflation, which measures the rate at which prices rise, rose marginally from 3.9% in November, but economists had predicted it would fall further.
The surprise uptick comes after much expectation of cuts to interest rates.
The Bank of England raised rates in a bid to tackle the pace of price rises in the UK, which has been putting the finances of households under pressure.
Financial markets and traders are now expecting it to cut its base rate in 2024 due to the inflation rate falling sharply since peaking at 11.1% in October 2022, which was the highest rate in 40 years.
The Bank's rate, which determines the cost of borrowing money as well as returns on savings, currently stands at 5.25%, a 15-year high.
Grant Fitzner, chief economist at the Office or National Statistics, said the recent introduction of higher taxes on tobacco products, such as cigarettes, was behind inflation ticking "up a little" in December.
"Quite a number of other countries are seeing a slight uptick in annual inflation in December," he told the BBC's Today programme. "Those include France, Germany and the US, so this is not entirely a surprise although the forecast was that it would continue to fall."
Tom Pugh, an economist at RSM UK, said people should not panic at the surprise increase.
"Of course, the unexpected tick up in inflation to 4.0% in December is unwelcome, especially as services inflation also rose and core inflation remained stable," he said.
This will probably be enough to quash any temptations at the (Bank of England) MPC to start to change tone at its meeting in February.
"However, the rise in services inflation was driven by a massive 57.1% jump in airfares in December, which are notoriously volatile and will be largely ignored by the MPC. What’s more, inflation is still 0.6ppts below the latest Bank of England forecast and wage growth is slowing. As a result, the door is still open to a first interest rate cut coming in May.
"Looking ahead, base effects mean that the inflation rate is likely to bumpy for the first three months of this year, potentially rebounding to almost 4.5% in January before falling to below 2% in May. That will provide excellent cover for the MPC to pivot and start cutting interest rates."
The UK's flagship share index, the FTSE 100, tumbled 104-points at 7,453 shortly after opening this morning.
Brent crude oil futures were down 1.14% today, trading at $77.40 a barrel.