The United Kingdom’s (U.K.) inflation rate rose to an annualized rate of 3% in January, coming in above the expectation of economists.
Britain’s Office for National Statistics (ONS) said inflation rose in January from a lower-than-expected 2.5% in December.
Economists polled by the Reuters news agency had expected inflation to come in at an annualized rate of 2.8% during January.
Core inflation across the U.K., which excludes volatile energy, food, alcohol and tobacco prices, rose by 3.7% year-over-year in January, which was up from 3.2% in December.
Inflation in the U.K. has been steadily rising after dropping to a three-year low of 1.7% in September of last year.
The increase in inflation has been sparked by higher fuel costs and services fees, which have grown faster than the price of goods.
Earlier in February of this year, the Bank of England made its first interest rate cut of the year, lowering its benchmark rate to 4.50%.
The U.K. central bank also cut in half its economic growth forecast for this year from 1.50% to 0.75%.
Analysts were quick to point out that the latest rise in inflation was larger than anyone expected and complicates the path forward on interest rates for the Bank of England.
The British pound was little changed against the U.S. dollar following the latest inflation reading.
