UK inflation rises to 3.4%, driven by tobacco and airfares

Inflation has risen to 3.4% in the year to December, with higher tobacco prices and airfares driving the rise, according to official figures.

The increase in average prices across the UK economy was slightly above expectations, with many economists predicting only a slight uptick to 3.3%.

The cost of airfares was a contributor “likely because of the timing of return flights over the Christmas and New Year period”, the Office for National Statistics (ONS) said. It also reflected an increase in tobacco duty introduced in late November.

It is the last set of monthly inflation figures released before the Bank of England’s decision on interest rates in February.