UK inflation rises to 10.4% as food prices soar | CNN Business

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CNN
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Consumer prices in the United Kingdom jumped by 10.4% in February compared with a year ago, as food inflation hit its highest level in more than 45 years and restaurants charged more for alcohol, official data showed Wednesday.

“Inflation ticked up in February mainly driven by rising alcohol prices in pubs and restaurants following discounting in January,” Grant Fitzner, chief economist at the Office for National Statistics, said in a statement.

Food inflation hit a new record high, with prices rising 18.2% through the year to February, up from 16.8% in January. The ONS said soaring food prices were partly caused by shortages of some salad and vegetable items, which led to rationing by supermarkets.

Inflation had been falling since hitting a 41-year high of 11.1% in October, largely driven by the lower cost of motor fuels.

Analysts say the surprise increase in prices makes it more likely the Bank of England will hike interest rates again when it meets Thursday.

Although recent turmoil in the banking sector is expected to weaken economic activity, as lending criteria are tightened, and so weigh on inflation, “the Bank of England may well want to see hard evidence of that before it stops raising interest rates,” said Paul Dales, chief UK economist at Capital Economics.

“It’s still a very close call, but these figures give us a bit more confidence in our forecast that the Bank will raise interest rates from 4% to 4.25% tomorrow.”

— This is a developing story and will be updated.