UK inflation unexpectedly rises as cost of tobacco and alcohol increases

Surprise uptick to 4.0% complicates forecasts of interest rate cut, while FTSE slumps 1.5%

• Analysis: inflation rise complicates outlook on interest rates
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UK inflation rose unexpectedly to 4.0% in December in the first increase for 10 months, complicating the timing of interest rate cuts from the Bank of England this year.

Shares on the FTSE 100 slumped 1.5% to register the worst daily fall since last August as investors bet that interest rates would be cut more slowly this year by the Bank of England than previously forecast.