The rate was expected to fall to 3.8% but instead rose. It is thought cigarettes, the government’s excise duty increase, and the way inflation is measured could be to blame.
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The annual rate of inflation has surprisingly increased to 4%, when a fall to just under 3.8% was previously predicted by economists instead.
The inflation rate before this announcement previously stood at 3.9% in November and leaped by 0.1% to 4% in December.
It is thought the greatest contributor to the growth in inflation was the increased cost of tobacco and alcohol - due to the way that inflation is measured.
Inflation is measured using the CPI, known as the Consumer Price Index.
The UK Consumer Price Index is a measure of inflation that is calculated by the Office for National Statistics.
It measures the change in the price of a typical basket of goods and services consumed by households in the UK.
The basket is made up of food, gardening products, alcohol, tobacco, sporting goods, and recreational services.
It is calculated by taking price changes for each item with goods weighted by importance and then averaging them.
This is why it is thought that tobacco is expected to have contributed to the increase in inflation.
As tobacco prices increased by 16% from 2022 to 2023 and the price of alcohol increased by just under 10%.
These two goods are said to have contributed most to inflation since 2006 and follows November’s 10% increase in tax on tobacco.
It is also thought the rise could factor into the Bank of England's decision making when it comes to deciding when to cut interest rates - leading to potential delays.
That is also backed up by warnings, inflation could still rise further due to Houthi rebel attacks on commercial ships in the Red Sea.