LONDON: British annual inflation unexpectedly picked up in December, data showed Wednesday, dashing hopes of an early cut to UK interest rates and prolonging a cost-of-living squeeze before an election.

The Consumer Prices Index (CPI) accelerated slightly to 4.0 percent from 3.9 percent in November, the Office for National Statistics said, confounding expectations for a modest slowdown.

The news dented hopes the Bank of England would cut interest rates in the first half of 2024, boosting the pound versus the dollar and euro but sending the London stock market slumping.