Inflation in the U.K. unexpectedly fell in December, a move that will likely fuel pressure on the Bank of England to cut interest rates again next month.

The rise in the interest rate investors are charging the UK government to borrow money over 10 years hit a 16-year high in recent days, piling pressure on Chancellor Rachel Reeves to cut spending or raise taxes.

The FTSE 100 ( ^FTSE) and European stocks were higher on Wednesday as traders digested news that UK inflation unexpectedly fell to 2.5% in December. This was down from 2.6% in November, according to the Office for National Statistics. Economists had expected inflation to stay steady at 2.6%.

UK inflation unexpectedly dipped in December for the first time in three months as hotel prices fell and tobacco costs eased. Prices rose 2.5% in the year to December, down from 2.6% the month before,