The UK’s Consumer Price Index (CPI), which measures inflation, rose to 3.4% year-on-year in December, according to data released by the Office for National Statistics (ONS) on Wednesday morning, January 21. This compares to a 3.2% increase in November and fell short of expectations of a 3.3% rise. The increase was driven by higher tobacco prices following the recent excise tax hike.

On a monthly basis, the CPI rose by 0.4% in November, compared to a 0.3% increase in December.

The core CPI, which excludes food, energy, alcohol, and tobacco prices, rose to 3.2% in December, unchanged from November and below expectations.

In detail, the annual rate of prices for alcoholic beverages and tobacco rose by 5.2% in December from 4.0% and increased by 1% on a monthly basis to reflect the tax increase in mid-November, while transportation prices rose by 4% from 3.7% and airfare prices rose by 28.6% with the Christmas celebrations, while food and non-alcoholic beverage prices rose by 4.2%.