Surprise jump in British inflation not expected to derail rate cuts

British inflation rose by more than expected in December, pushed higher by air fares and tobacco prices, but the fastest rate of price growth among the world’s big, rich economies is still likely to slow sharply "in the coming months.

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People shop at a market stall in east London.

Investors held steady on their bets on the Bank of England cutting interest rates later this year with services price inflation, which is closely watched by the central bank, edging up in line with analysts’ forecasts. Headlineinfiationheaded up for the first time since July, climbing to 3.48 from 3.28 in November, the Office for National Statistics said, above a median forecast of a rise in consumer price inflation to 3.38 in a Reuters poll of economists.

“although the uptick is larger than expected, for now it's a speed-bump, rather than an indication we are veering off course on the road to price stability;” Adam Deasy, an economist at PwC, said.

The fastest rate of price growth among the world’s big, rich economies is still likely to slow sharply in the coming months