by William Schomberg and David Milliken
LONDON (Reuters) – UK consumer price inflation (CPI) reaccelerated unexpectedly to 10.4% year on year in February, statistics released by the ONS on Wednesday showed, a day before of the Bank of England (BoE) meeting.
Economists polled by Reuters forecast a slowdown to 9.9%, after +10.1% a month earlier and a 41-year peak recorded in October at +11.1%.
Excluding energy prices and other volatile items, prices rose 6.2%, compared to a rise of 5.8% in January and a consensus of +5.7%.
Inflation in the services sector, considered a good barometer of underlying price pressures in the economy, reached 6.6% year on year after +6.0% in January.
The BoE will hold its monetary policy meeting on Thursday and the markets were forecasting before this publication of this statistic a rate hike limited to 25 basis points or a status quo.
“Given the market movements of late, this puts the Bank of England in an incredibly difficult position as a pause in rate hikes may not be enough,” said Richard Carter, head of research without the bondholder. at Quilter Cheviot.
In the foreign exchange market, the pound rose against the dollar and the euro after the release of this data.
According to the ONS, the end of drink promotions in January in pubs and restaurants is the main factor behind the rise in inflation in February. Salad shortages also contributed to the rise, the ONS added.
“Food and non-alcoholic beverage prices reached their highest rate in more than 45 years, with increases notably on salads and vegetables, as high energy costs and bad weather in some areas in Europe led to shortages and rationing,” said Grant Fitzner, chief economist at the ONS.
UK Finance Minister Jeremy Hunt said the expected fall in inflation could not be taken for granted.
“So we have to stick to our plan to halve it this year,” he wrote in a statement.
The day before, before Parliament, he had judged that inflation above 10% was “dangerously high”.
(Report David Milliken; Claude Chendjou, edited by Kate Entringer and Blandine Hénault)
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