Britain’s consumer price inflation rate jumped sharply in February the Office for National Statistics said Wednesday, with rising food prices largely to blame. File photo by Andy Rain/EPA-EFE
March 22 (UPI) — Britain’s inflation rate bucked expectations by reversing three consecutive months of declines to rebound to 10.4% in February, the county’s main statistical agency said Wednesday.
Consumer price inflation, the speed at which prices are rising, which had been forecast to slow to single digits instead gathered pace from January’s 10.1% rate driven by a spike in food and beverage prices, according to the Office for National Statistics.
Prices of food and non-alcoholic drinks jumped 1.4% from January pushing the inflation rate for the essential category to a 45-year high of 18.2%. The agency said the other main drivers were increases in restaurant and cafe prices and clothing.
The ONS’ chief economist, Grant Fitzner, said part of the cause for the price spikes of food in restaurants and alcohol in pubs was the removal of traditional January discounting.
But as Fitzner explained in a Twitter post, overall food price rises were caused by “particular increases for some salad and vegetable items as high energy costs and bad weather across parts of Europe led to shortages and rationing.”
“These were partially offset by falls in the cost of motor fuel, where the annual inflation rate has eased for seven consecutive months,” he said.
Labor’s Shadow Chancellor, Rachel Reeves, condemned the figures saying that the “stubbornly high inflation” rate was causing Britain to fall behind the better-performing economies of its main competitors in Europe, as well as the United States.
“This underlines yet again how 13 years of Tory government has left families worse off. Prices are up and taxes on working people rising, yet the government are choosing to hand $1.2 billion to the top 1%. Labor will stand with working people,” Reeves wrote on Twitter.
After inflation fell in November, December and January, many economists forecasted it to fall again in February.
The performance will put pressure on Thursday’s meeting of the Bank of England’s Monetary Policy Committee to raise interest rates to tame the country’s problem inflation which has been in double digits for six consecutive months.
Bank Rate currently stands at 4% after the bank increased the base interest rate by 0.5% last month, the tenth time it has hiked since began tightening monetary policy in December 2021.
However, any hawkish impulse will be counterbalanced by the current headwinds impacting the banking sector internationally, as well as Wednesday’s decision by the U.S. Federal Reserve on whether to hike, hold, or hike rates. The key Federal Funds Rate currently stands at 4.5%.