British annual inflation unexpectedly accelerated in February despite central bank efforts to tame a growing cost-of-living crisis, official data showed today.
The Consumer Prices Index (CPI) rose by 10.4 percent in the 12 months to February 2023, up from 10.1 percent in January, the Office for National Statistics said.
The news strengthened the case for another interest rate hike on Thursday from the Bank of England, despite calls for no change amid global turmoil in the commercial banking sector.
Expectations had been for a slowdown in UK inflation, but prices jumped for food and drinks — offset only partially by falling motor fuel costs.
“Inflation ticked up in February, mainly driven by rising alcohol prices in pubs and restaurants following discounting in January,” said ONS chief economist Grant Fitzner.
“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 BoE is caught between hiking borrowing costs to dampen inflation — or hanging fire amid ongoing fallout from the collapse of two regional US banks and the UBS buyout of embattled Swiss giant Credit Suisse.
Wednesday’s data comes after the UK government last week forecast inflation would slow sharply to 2.9 percent by year-end, with the nation set to avoid recession.
The predictions were published alongside finance minister Jeremy Hunt’s massive £94-billion ($114-billion) cost-of-living measures for this year and next.
“We need to stick to our plan to halve it this year,” Hunt said Wednesday in response to the latest data.
“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.”
Inflation around the world had struck the highest levels in decades last year as the invasion of Ukraine by Russia fuelled energy and food prices.
The BoE, whose chief task is to keep inflation close to two percent, will unveil its latest monetary policy decision on Thursday.
(Except for the headline, this story has not been edited by String Reveals staff and is published from a syndicated feed.)