The UK inflation rate remained flat at 3% in January, according to the Office for National Statistics (ONS), beating analysts' expectations of a drop to 2.9%.
Consumer Price Inflation (CPI) came in unchanged on the previous month after a fall in oil prices was offset by prices for cultural goods and services, according to the ONS.
In particular, the ONS said, prices for admissions to zoos and gardens fell less than they did a year ago.
In December, inflation fell to 3% from November's five-year high of 3.1%, its first drop since June 2017.
Inflation has been climbing steadily since the beginning of last year but many have predicted it has peaked at around 3%. However, concerns about rising inflation, albeit particularly in the US, have caused market wobbles since the end of January as investors worry about the impact of central banks tightening monetary policy.
The Bank of England (BoE) had expected inflation to fall back from 3% and in last week's monthly Monetary Policy Committee meeting the minutes said a rate rise would be needed "somewhat earlier" in order to return inflation to its 2% target.
With inflation remaining at 3% last month it increases the likelihood of a rate hike in May.
Following the ONS announcement, sterling rose 0.3% against the US dollar to $1.388, while the FTSE 100 was level at 7,175 points. UK 10-year government bond yields widened 0.19% to £1.604.
Lucy O'Carroll, chief economist at Aberdeen Standard Investments, said inflation was broadly in line with expectations and it may have now peaked, as the impact of sterling's post-referendum decline has fallen away.
"But there are signs that the dynamics in the labour market are finally driving some level of domestically generated inflation. We have been waiting a number of years for this to happen.
"So even if inflation drops back a bit further from here, it looks likely to settle at a higher level than the BoE feels comfortable with. It will also mean slightly higher interest rates than we've been used to.
"The risk is that today's number is seen as a bit incidental, given that the BoE hinted at a rate rise in May just last week.
"But financial markets should not assume that any hike is a done deal. Inflation could fall away more sharply than expected between now and May.
"Brexit could yet derail any hikes in the short term, too. The BoE's forecasts are based on a smooth Brexit transition, and you would be forgiven for thinking that things might be bumpier, for a while at least."
Ben Brettell, senior economist, Hargreaves Lansdown: "Inflation has now been above target for 12 straight months.
"This adds further weight to the case for higher interest rates sooner rather than later.
"Indeed Bank of England policymakers said last week they will try and bring inflation back to target more quickly than previously expected, which means rates could rise faster and further than anticipated.
"The BoE's rhetoric echoed that of September's meeting minutes, which preceded last November's rate hike, and it now looks like the next rise may well happen in May.
"Persistent inflation also has implications for the UK's ongoing cost-of-living squeeze.
"Wage growth is currently running at 2.5%, so the spending power of pay packets is still falling in real terms.
"We will be looking for an increase when the ONS reports next week. The BoE has said it expects pay growth to accelerate in 2018, and this is yet another reason higher interest rates are on the table.
"It seems domestically driven inflation could seamlessly take over from the sterling-related price rises we have seen since the Brexit vote.
"If this is the case, some tightening of monetary policy looks increasingly appropriate."
Thomas Wells, manager of the Smith & Williamson Global Inflation-Linked Bond fund, said: "UK inflation remains elevated, and with CPI remaining at 3.0%, there is a good probability the BoE will not be able to get CPI inflation back to the 2% target this year.
"In our minds, one of the most likely scenarios from here is one of low or mediocre GDP growth but still elevated levels of UK inflation.
"This is a disaster for households, many of which are about to be clobbered with inflation-busting increases for bills such as council tax.
"The one positive is that oil prices have softened materially since the beginning of February, which is now translating into lower breakeven rates of inflation.
"In terms of the policy outlook, we think the BoE should wait until the sterling collapse effects have fully left the system before being able to assess the domestic demand impact on the headline inflation figures."
Alistair Wilson, head of retail platform strategy at Zurich UK, said: "The overall rise in inflation has been persistent. Adding fuel to the fire is the continuing stagnation of wages over the same period, with increases remaining well below the rate of inflation and putting further strain on household disposable incomes.
"After last week's falling share prices, high inflation will put a second dent in the spending power of pensioners whose pots are invested in the stock market.
"Last week's MPC meeting would suggest another rate rise is just around the corner.
"While a significant increase is unlikely, savers will still need to take a hands-on approach to their finances if they are to avoid any future shocks."
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