UK inflation rises unexpectedly, but Bank of England sees path for rate cuts

Inflation in the UK rose to 3.4% in December, which was higher than economists had expected. This was the first increase in five months, though officials pointed to one-off factors as the cause.

The Bank of England said its previous inflation forecasts were too high partly because it overestimated wage growth. Despite the surprise jump, analysts do not think it will stop the central bank from cutting interest rates later this year, especially as weaker jobs data might help ease price pressures.