The rate of price increases rose again in December, official figures have confirmed, with inflation rising to 3.4%.

It's higher than anticipated - an increase to 3.3% was forecast by economists polled by the Reuters news agency.

Data from the Office for National Statistics (ONS) showed the consumer price index (CPI) measure of inflation ticked up from 3.2% a month earlier.

Higher tobacco prices, due to raised taxes, and more expensive airfares are behind the increase, the ONS said.

Elevated food costs, especially bread and cereal, were also said to have brought overall inflation up. Food inflation rose to 4.5% in the key Christmas shopping month.

The overall inflation rate was kept in check as rent rises were not as steep as before.

Lower oil prices also helped slow the rise in the cost of raw materials.

Looking ahead, inflation is expected to slow and could hit the Bank of England's 2% target by April this year.

The rise recorded today is said to be a "temporary blip" by the Institute of Chartered Accountants in England and Wales (ICAEW), which is forecasting a drop to 2% by the summer due to expected lower energy bills in April.

That could mean an interest rate cut or two and cheaper borrowing as a result.

This breaking news story is being updated and more details will be published shortly.

Please refresh the page for the latest version.

You can receive breaking news alerts on a smartphone or tablet via the Sky News app. You can also follow us on WhatsApp and subscribe to our YouTube channel to keep up with the latest news.