UK inflation surges to 4.4% in February

| March 22, 2011 | 0 Comments
”UK

The Office for National Statistics (ONS) today announced Consumer Price Inflation (CPI) rose to an annual rate of 4.4% in February – the highest rate since October 2008.

The latest figures mean inflation is still way above the target of 2% – where it has been for more than a year and exceeded economists expectations of a rise to 4.2%.

The rise was attributed to higher costs for fuel, food and clothing.

On a monthly basis, meanwhile, prices rose 0.7%.

According to the Governor of the Bank of England, Mervyn King, inflationary pressures are arising from either external forces such as commodity prices, or temporary domestic factors such as January’s VAT hike.

The CPI inflation rate is a benchmark for the Bank’s Monetary Policy Committee but only a few members have voted for interest rates to be lifted from their current historic low to bring inflation down.

Earlier this month, the Bank again opted to keep interest rates at the record low of 0.5% suggesting that the economy is still too fragile to lift rates.

It is yet unknown how members of the Monetary Policy Committee voted this month but minutes of the meeting will be published tomorrow.

However, many leading business groups are calling on the central bank not to lift rates until later in the year since a premature interest rate hike could derail the economic recovery.

Meanwhile, Retail Price Inflation (RPI), which includes mortgage costs and is used as the basis for many wage deals, surged to 5.5% in February, from 5.1% in January - this represents the highest level since July 1991.

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