Economists polled by Portal had expected the annual headline CPI to fall slightly to 3.8%, after a steeper-than-expected decline to 3.9% in November.
Month-on-month, headline CPI rose 0.4%, above the consensus forecast of 0.2% and up from -0.2% in November.
“The largest upward contribution to the monthly change in both CPIH and annual CPI rates came from alcohol and tobacco, while the largest downward contribution came from food and non-alcoholic drinks,” the Office for National Statistics said.
The closely watched core CPI reading – which excludes fluctuating food, energy, alcohol and tobacco prices – came in at an annual 5.1%, above a Portal forecast of 4.9% and was unchanged from November.
The biggest upward contribution to the core figure came from travel and transport services, the ONS said.
“As we have seen in the US, France and Germany, inflation is not falling in a straight line, but our plan is working and we should stick to it,” British Finance Minister Jeremy Hunt said in a statement.
“We have made difficult decisions to control borrowing and are now facing a turning point. That’s why we need to stay on course, including stimulating growth through more competitive tax rates.”
The Bank of England will hold its next monetary policy meeting on February 1 after rapidly raising interest rates over the past two years to curb runaway inflation.
A new round of jobs data on Monday also highlighted the difficult road ahead for Britain's central bank as it decides when and how much to cut interest rates in 2024. Markets are currently pricing in cuts of more than 100 basis points in the benchmark rate throughout the year.
The number of job openings fell by 49,000 in the final quarter of the year, while the unemployment rate remained largely unchanged at 4.2%.
Wages growth, a key data point for the bank, slowed significantly in the three months to the end of November. Because inflation falls faster than this rate, the average wage is still rising in real terms.