Britain's Consumer Prices Index (CPI) rose by 2.5 per cent in the 12 months to December 2024, down from 2.6 per cent in November, according to data from the Office for National Statistics (ONS) released on Wednesday.

"Inflation eased very slightly as hotel prices dipped this month but rose a year ago. The cost of tobacco was another downward driver, as prices increased by less than this time last year," said ONS Chief Economist Grant Fitzner.

"This was partly offset by the cost of fuel and also second-handcars, which saw their first annual growth since July 2023," Fitzner added.

The ONS reported that the core CPI, excluding energy, food, alcohol and tobacco, rose by 3.2 per cent in December, down from 3.5 per cent in November. The CPI goods annual rate rose from 0.4 per cent to 0.7 per cent, while the CPI services annual rate fell from 5 per cent to 4.4 per cent.

Wednesday's readings are closely monitored by the Bank of England, whose next rate decision will come in February, Xinhua news agency reported.

"UK inflation has been sticky but, with services and core inflation both surprising on the downside, this gives the Bank of England more room to cut interest rates in the coming months," said London-based think tank Resolution Foundation.

The National Institute of Economic and Social Research warned that the upcoming Trump presidency has heightened global uncertainty and inflation expectations.

"Therefore, although we expect the MPC to gradually cut rates in 2025, we think the Bank will remain cautious, and rates may remain higher for longer," said the institute.