Inflation unexpectedly rose to 10.4 per cent in February, in surprise development that risks a new hike in interest rates.
The rate of Consumer Prices Index inflation increased to 10.4 per cent in February from 10.1 per cent in January, the Office for National Statistics said.
ONS chief economist Grant Fitzner said: “Inflation ticked up in February, mainly driven by rising alcohol prices in pubs and restaurants following discounting in January.
“Food and non-alcoholic drink prices rose to their highest rate in over 45 years with particular increases for some salad and vegetable items as high energy costs and bad weather across parts of Europe led to shortages and rationing.
The Bank of England is set to announce its interest rates decision tomorrow
PA
“These were partially offset by falls in the cost of motor fuel, where the annual inflation rate has eased for seven consecutive months.”
The latest figures come just 24 hours before the Bank of England (BoE) must decide whether to alter the base rate for interest rates.
The Bank’s Governor, Andrew Bailey, has previously warned that rates may need to continue to rise in order to get inflation under control.
Ministers have set the BoE a target of two per cent inflation, with the current rate more than five times the desired amount.
Any hike in interest rates will likely lead to a further rise in the costs of mortgage repayments.
Interest rates in the UK have risen the last ten times the BoE’s monetary policy committee has met.
In February rates hit four per cent, the highest figure for 14 years.
Responding to today’s inflation figures, Chancellor Jeremy Hunt warned that “falling inflation isn’t inevitable”.
“We need to stick to our plan to halve it this year,” he said.
Chancellor Jeremy Hunt said falling inflation was ‘not inevitable’
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“We recognise just how tough things are for families across the country, so as we work towards getting inflation under control we will help families with cost-of-living support worth £3,300 on average per household this year.”
Shadow chancellor Rachel Reeves said: “The reality is that under this Tory Government, families are feeling worse off and nothing is working better than it did 13 years ago.
“The cost-of-living crisis is still biting hard and taxes are rising, yet the Government chose to use the Budget to hand a £1billion bung to the top one per cent.
“Labour will stand with working people and with our mission to secure the highest sustained growth in the G7, make families across every part of our country feel better off.”
